Terms

Reach For Yield

Parent term
Reaching for yield is a commonly used phrase in finance and investing. It characterizes a situation in which an investor is seeking higher yields on his investments, but ultimately earns far less because of the higher defaults associated with the higher yielding credit. Indeed, investors who are aggressively reaching for yield often tend to show the opposite of normal risk aversion, instead of becoming risk loving in their choices, whether consciously or not.

Above a certain yield, the credit risk does not pay off because the losses outweigh the yield.