Slippage
His fund is down 6.1 percent for the year and down 6.2 percent, annualized, for the last three years, according to Morningstar.
Jack V. Malvey, chief global fixed-income strategist at Lehman Brothers, said he and others on Wall Street mistakenly predicted a rebound in the junk bond sector at the start of the year. "Our prognostications were not correct," Malvey acknowledged. Still, he said, "this would be a good period to consider shopping in the high-yield market."
John E. Puchalla, senior economist at Moody's, played down the risk of higher default rates and further accounting scandals, saying that much of that risk is already reflected in yields. "Premiums are already extremely wide relative to historical averages," Puchalla said.
"We've already seen some firming of earnings, so we would expect favorable returns on speculative bonds in the next year."
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