How Brexit Can Benefit High-Yield Markets Long-Term

The video discusses the impact of market stress on high yield markets, highlighting that low growth environments can benefit high yield assets. It explores the role of central banks, particularly the ECB, in influencing high yield markets and the ripple effects on the broader market. The debate between active and passive management is examined, with active management often outperforming in high yield markets. The video concludes with a discussion on the ECB's potential actions in financial markets and the implications for asset prices.

How do high yield markets typically perform in low growth environments?

• They remain unaffected by growth rates.

• They perform well as they don't rely on growth.

• They perform well only in high growth environments.

• They perform poorly due to lack of growth.

What is a potential consequence of central banks buying government and investment grade debt?

• It pressures yields down on safer securities, pushing investors towards high yield.

• It stabilizes the equity markets immediately.

• It decreases the demand for high yield securities.

• It increases the yields on high yield securities.

What is a key advantage of active management in high yield markets?

• It allows managers to react to market changes and avoid risks.

• It follows the rules of the index strictly.

• It always guarantees higher returns than passive management.

• It is less expensive than passive management.

What happens when there is a suspension in the issuance of new high yield bonds?

• It causes a decrease in bond prices.

• It leads to a permanent market closure.

• It reduces the demand for existing high yield bonds.

• It can be beneficial as lack of supply increases demand for existing bonds.

What is the ECB's primary mandate according to the discussion?

• To maintain financial stability without focusing on asset prices.

• To stabilize asset prices.

• To ensure high growth in equity markets.

• To react to market demands in the short term.