DWS Investments: Some high-grade bonds preferred over junk; few risk-free asset classes remain

By Andrea Heisinger

New York, July 25 - Some sectors of the high-grade bond market are preferred as investments at the moment over high-yield debt or municipals, sources said at a DWS Investments press briefing on Wednesday.

Value in the fixed income market lies in BBB rated corporates, mortgages and municipals, said Philip Condon, managing director, chief fixed income strategist and head of DWS Investments Municipal Bond Department.

"They're good places to be," he added. "High-yield and munis - we're not going to take a lot of risk there. We're not shying away; we're just dialing it down."

Condon later said that there's risk in the bond market, but investors should go somewhere where there's value.

There are fewer risk-free asset classes today, Condon said. Although Treasuries are still considered risk free, Condon added "but who knows what will happen with inflation."

Condon later said that if you're a foreign investor leaving the euro zone, you're going to go to Treasuries.

Sovereign debt in general is a big issue, said Owen Fitzpatrick, CFA, managing director, chief equities strategist and head of the U.S. large-cap growth equity team.

"There's not a lot of improvement," he said. "You've started to see debt widen out in European entities."

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