investment grade bonds are more sensitive to rates (i.e. a higher duration risk), high yield bonds normally have a lower duration sensitivity, given their higher coupon income during the bond’s life and therefore lower price sensitivity to the present value of the final repayment cashflow. This gives high yield a slight edge from a rate risk perspective, especially for shorter duration high yield bonds.

With credit fundamentals remaining strong and defaults low, and the quality composition of the US HY index now improving to more than 60% in highest tier BB-rated debt, high yield debt is presenting itself as a more attractive building block within fixed income. As the yield-to-worst chart earlier shows, the average US high yield bond yields around 8.4% today, providing about 240bps of yield pickup over US investment grade, while having less rate risk. 

Of course, it is important to remain selective within HY due to the higher corporate credit risk, exercising caution in the lower-rated credits such as single B and CCC, which have weaker balance sheets and higher leverage, especially under a rising rate environment. Given the current tighter spread environment in High yield  credit selection also remains    key points An actively managed approach with        rigorous bottom up selection can help better navigate the risk/reward tradeoffs.