Yield Chasing
a.k.a. Reaching for yield, Search for yield
Taking on more risk than usual just to get a higher return, typically when safe investments pay very little.
In plain English
Taking on more risk than usual just to get a higher return, typically when safe investments pay very little.
Yield chasing is what happens when safe returns dry up. With savings accounts and government bonds paying almost nothing, investors drift into riskier assets, junk bonds, emerging markets, high-dividend stocks or carry trades, to squeeze out a bit more income.
It often works for a while, until it does not. The extra yield is payment for extra risk, and when markets turn, crowded yield trades can unwind violently.
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