Sam Benstead, deputy collectives editor at interactive investor, shares his bond tip for the year ahead.

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As we slowly approach the year 2023, investors are looking for lucrative opportunities to invest their money in. The high-yield bond market has become a popular option for those seeking high returns on their investments.

My tip for the high-yield bond market in 2023 is to focus on ‘junk bonds’ from industries that are relatively stable and have a track record of consistent performance. This tip is based on the expected economic and market conditions during this period.

Firstly, it is expected that the global economy will continue to expand, albeit at a slower pace than before. As a result, investors will become more cautious and more inclined to protect their investments from market volatility. This will create an increased demand for bonds that offer higher yields but are still relatively safe.

Secondly, certain industries are expected to outperform in the coming years. These industries include healthcare, technology, and utilities. Investing in junk bonds from these industries can provide a higher return on investment while also minimizing the risk of default.

Another important factor to consider when investing in high-yield bonds is to look at the financial health of the issuing company. Companies that have a strong track record of creditworthiness and a solid balance sheet are more likely to make timely payments on their bonds than those that are struggling financially.

Lastly, it is important to diversify your high-yield bond portfolio. Investing in a variety of bonds from different industries and companies can help spread the risk, minimize losses, and maximize returns.

In summary, my high-yield bond market tip for 2023 is to focus on ‘junk bonds’ from stable industries such as healthcare, technology, and utilities. It is also important to consider the financial health of the issuing company and to diversify your portfolio to minimize risk. Invest wisely and enjoy the high returns that the high-yield bond market has to offer!