High-Yield Bonds: Historical Performance Data

Year-by-Year Total Returns From 1980 Through 2013

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It’s extremely challenging to find year-by-year returns for the high-yield bond market, and that's odd when you think about it. This is an asset class with a great deal of money invested in it. If you're interested in seeing how high-yield bonds have performed over time, this table shows the return for the category each year from 1980 through 2013. It includes its performance relative to stocks as gauged by the S&P 500 Index, and relative to investment-grade bonds as measured by the Barclays Aggregate Bond Index.

High yield returns are represented by the Salomon Smith Barney High Yield Composite Index from 1980 through 2002, and the Credit Suisse High Yield Index from 2003 onward.

YearHY BondsInvestment-Grade  Stocks
 1980  -1.00%  2.71%  32.50%
 1981  7.56%  6.26%  -4.92%
 1982  32.45%  32.65%  21.55%
 1983  21.80%  8.19%  22.56%
 1984  8.50%  15.15%  6.27%
 1985  26.08%  22.13%  31.73%
 1986  16.50%  15.30%  18.67%
 1987  4.57%  2.75%  5.25%
 1988  15.25%  7.89%  16.61%
 1989  1.98  14.53%  31.69%
 1990  -8.46%  8.96%  -3.11%
 1991  43.23%  16.00%  30.47%
 1992  18.29%  7.40%  7.62%
 1993  18.33%  9.75%  10.08%
 1994  -2.55%  -2.92%  1.32%
 1995  22.40%  18.46%  37.58%
 1996  11.24%  3.64%  22.96%
 1997  14.27%  9.64%  33.36%
 1998  4.04%  8.70%  28.58%
 1999  1.73%  -0.82%  21.04%
 2000  -5.68%  11.63%  -9.11%
 2001  5.44%  8.43%  -11.89%
 2002  -1.53%  10.26%  -22.10%
 2003  27.94%  4.10%  28.68%
 2004  11.95%  4.34%  10.88%
 2005  2.26%  2.43%  4.91%
 2006  11.92%  4.33%  15.79%
 2007  2.65%  6.97%  5.49%
 2008  -26.17%  5.24%  -37.00%
 2009  54.22%  5.93%  26.46%
 2010  14.42%  6.54%  15.06%
 2011  5.47%  7.84%  2.11%
 2012  14.72%  4.22%  16.00%
 2013  7.53%  -2.02%

  32.39%

Historical Factors to Keep in Mind

Keep a few historical factors in perspective when you're looking at these returns. First, there was a much higher representation of “fallen angels”—former investment-grade issues that fell into below-investment-grade territory—in the early days of the high-yield market than there is today.

There was a corresponding lower representation of issues from the type of smaller companies that make up the bulk of the market now.

Second, all the down years for high yield were accompanied by the economic slowdowns in 1980, 1990, 1994, and 2000, or by financial crises in 2002 and 2008.

Third, yields were much higher in the past than they are today. While absolute yields spent much of the 2012–2013 period below 7.5 percent and they reached as low as the 5.2 to 5.4 percent range in April and May 2013, these levels would have been unheard of in prior years. The 1980–1990 period generally saw yields in the mid-teens. Even at the lows of the late 1990s, high-yield bonds still yielded 8 to 9 percent. During the 2004–2007 interval, yields hovered near the 7.5 to 8 percent level, which were record lows at the time. High-yield bonds also paid a much higher yield than they do now.

The takeaway is twofold. High-yield bonds had higher return potential due to the larger contribution from yield to total return, and there was more room for price appreciation. Remember that bond prices and yields move in opposite directions. As a result, people who invest in the asset class today shouldn’t expect a repeat of the type of returns shown above.

Still, these numbers show that high-yield bonds have delivered very competitive returns over time.