Insight suggests the case for looking at bonds in this way rests on three pillars:

• The power of compounding: When yields on sterling or euro-denominated bonds are in the 4–6% range, reinvesting coupons or interest payments can generate exponential growth over time.
• Attractive relative returns and lower volatility: Historically, global high-yield credit has matched the compound returns of global equities when coupons are reinvested, yet with roughly half the annualised volatility of broad equity indices.
• Flexible, active investment management to unlock value: Passive bond strategies may appear low-cost, but they can miss opportunities to harvest mispricings across government, investment-grade and high-yield sectors.

Also in the report, Insight outlines three fixed income strategies that offer opportunities for ‘equity-like’ returns: 

• High yield credit: Offers the potential for attractive returns with manageable default risk, especially in short-dated bonds.
• Fallen angels: Bonds that have been downgraded from investment grade to high yield can present value opportunities due to forced selling (from both active and passive investors) and the possibility of a subsequent recovery. 
• Strategic bond strategies: Flexible mandates allow managers to pivot across sectors and geographies, giving them the freedom to capture incremental returns.

The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.

¹ Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.