The takeaway? High yield may be a value relative to where it has been in the last five years, but the last five years are expensive from a historical standpoint.
It’s like walking in to a store to buy a gift for your significant other. The clerk shows you a watch worth $1,000—now offered at the low, low price of $500. “What a steal,” you think.
Except if the clerk had just outright said the watch was $500 in the first place, you’d probably think it was expensive.
Things can be relatively cheap but still be absolutely expensive. That’s probably a good description of high yield today.
Consider the following drawdown graph of HYG: