High-yield bonds are experiencing record inflows as investors search for higher returns. The asset class has become increasingly popular as interest rates remain low across the board.

Demand Drives Down Yields

The increased demand for high-yield bonds has had a direct impact on yields, pushing them downwards. This is a classic supply and demand scenario, with greater demand leading to higher prices and, consequently, lower yields.

Credit Spreads Tighten

In addition to lower yields, credit spreads have also tightened. This indicates that investors are becoming more comfortable with the level of risk associated with these bonds.

Factors Contributing to Inflows:

• Low interest rate environment
• Increased risk appetite
• Search for yield

The trend of record inflows into high-yield bonds is expected to continue as long as interest rates remain low and investors are willing to take on more risk.