Historical Performance Data of High-Yield Bonds

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, which is 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 returns for the high-yield and investment-grade bonds indexes alongside the S&P 500 stock index each year from 1980 through 2019.

High yield returns are represented by the Salomon Smith Barney High Yield Composite Index from 1980 through 2002, the Credit Suisse High Yield Index (DHY) from 2003 through 2013. From 2014 on, the S&P 500 Investment Grade Corporate Bond Index, and Federal Reserve Bank of St. Louis' S&P 500 data were used. 

Year HY Bonds Investment-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%
2014 .77% 7.00% 10.22%
2015 -6.70% -0.22% -0.73%
2016 14.43% 4.81% 9.00%
2017 6.48% 4.62% 16.00%
2018 -3.27% -2.07% -6.60%
2019 14.88% 11.80% 22.41%

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 bond issues that fell into the below-investment-grade category) in the early days of the high-yield investment-grade 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% (reaching as low as 5.2% in April and May 2013), these levels would have been unheard of in previous years. The 1980–1990 period generally saw yields in the mid-teens. Even during the lows of the late 1990s, high-yield bonds still yielded 8% to 9%.

During the 2004–2007 interval, yields hovered between 7.5% to 8%, which were record lows at the time. High-yield bonds also paid a much higher yield on average than they do now.

Considerations for the Future

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. 

Article Sources

  1. Federal Reserve Bank of St. Louis. "S&P 500." Accessed Feb. 11, 2020.

  2. S&P Dow Jones Indices. "S&P 500 Investment Grade Corporate Bond Index." Accessed Feb. 11, 2020.