@article {Fridson96, author = {Martin S Fridson and Karen Sterling}, title = {Original Issue High-Yield Bonds}, volume = {34}, number = {1}, pages = {96--101}, year = {2007}, doi = {10.3905/jpm.2007.698038}, publisher = {Institutional Investor Journals Umbrella}, abstract = {In the past full market cycle, original issue high-yield bonds delivered no material total return premium over default risk-free Treasuries. This represents a bona fide market inefficiency that proved exploitable by one group engaged in actual market transactions; the corporate sellers of new issues escaped paying a default risk premium. Among the five complementary rather than mutually exclusive factors identified here that may explain this anomaly are: unawareness of the underperformance of the OI segment; a focus on security selection; a lottery ticket effect; and the mirage of remedy based on yield. The discussion gets to the heart of the premise on which the high-yield investment concept was marketed at the dawn of its modern era in the late 1970s.TOPICS: Risk management, fixed-income portfolio management, portfolio construction}, issn = {0095-4918}, URL = {https://jpm.pm-research.com/content/34/1/96}, eprint = {https://jpm.pm-research.com/content/34/1/96.full.pdf}, journal = {The Journal of Portfolio Management} }