High-yield bonds offer stock-like returns with lower volatility

High-yield bonds, commonly termed junk bonds, have historically provided returns comparable to equities while maintaining lower volatility, according to investor Saurabh Mukherjea. The appeal lies in their structural advantages: regular coupon payments, senior position in repayment hierarchy, and portfolio diversification benefits.

Mukherjea explains that the combination of these factors makes high-yield bonds a useful tool for investors seeking equity-like growth without experiencing the same level of market fluctuations. The bonds' positioning in a company's capital structure provides investors downside protection compared to common stocks.