Morningstar’s Take on High-Yield Bonds Today

High-yield bonds have been making waves in recent weeks as prices have slumped and worries about liquidity have grown. The latest catalyst was this Third Avenue Focused Credit Fund that is closed to redemptions because of some concerns over its portfolio. But other concerns ranging from exposure to the energy sector to higher interest rates have also been weighing on the market.

Morningstar analysts have provided their take on what is happening in the junk bond market right now and why investors need to keep a long-term perspective.

Many Concerns About Third Avenue The Focused Credit fund prompts Parent rating downgrade, but other issues are apparent.

High-Yield Funds Hold Up Relatively Well in a Rough Year for Credit The high-yield market's troubles have been driven primarily by the energy and commodity sectors.

What the Third Avenue Fund Failure Can Teach Investors Investors should be aware of the general risks of buying bond funds that own non-rated, smaller issues, and the specific risks that the energy sector brings to high-yield funds today.

What High-Yield Investors Need to Know Today The problems at Third Avenue are likely isolated, but both active and passive high-yield investors need to be aware of the risks and opportunities today.

Junk-Bond Funds Settle Down After a Rough Week A rough stretch for high yield is a reminder that the sector can require a strong stomach.

Third Avenue Focused Credit Returns to a Fund Structure Returning to the open-end format provides more transparency for shareholders but changes little else.

Will Other High-Yield Funds Face Third Avenue Fund's Fate? The demise of Third Avenue Focused Credit represents a profound management failure, but it isn't likely that we'll see other high-yield funds follow suit.