What is a Yield Pickup?
How Does a Yield Pickup Work?
Why Does a Yield Pickup Matter?
It is important to note that yield is a function of risk. In particular, bonds that carry higher risk of default tend to have higher yields. Thus, a yield pickup may occur simply because the investor decided to make a riskier investment. In many cases, yield pickup is most exciting when an investor can increase his or her yield by selling and buying bonds that have the same rating or credit risk.