In The News - Investment Week - Choosing the right metric to value a bond

Stevan Bajic, portfolio manager, Altana Corporate Bonds fund, explains why yield to maturity should not be the only metric for deducing the value of a bond.

Yield to maturity (YTM) has long been held as the standard for valuing any fixed income investment which an investor intends to hold until the borrower repays its debt. But how acceptable is it to consider YTM as the only way of calculating a bond’s value?

An increasing number of experts in the fixed income space are suggesting this approach is insufficient. The failings with considering YTM alone, is it does not consider the deteriorating visibility an investor has on the health of the company once they are investing beyond, say, two years.

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