Junk Bonds Outpace U.S. Stocks

Strength shows investors are betting on expanding economy.

Junk bonds are poised to extend their lead over U.S. equities into a fifth year as debt investors bet that the American economy will keep expanding even if profit growth slows.

Speculative-grade debt has beaten the Standard & Poor’s 500 Index by 53 percentage points since October 2007, as the bonds returned 34 percent and the benchmark measure for U.S. equity fell 19 percent, according to data compiled by Barclays Plc and Bloomberg. Investors who held junk-rated bonds of Ford Motor Co. earned seven times as much as shareholders, while debt from Sprint Nextel Corp. and J.C. Penney Co. beat their stocks.

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