Jeff Rosenkranz, Christopher Walsh, Featured in Bloomberg
Read the Article: Outperforming during periods of rising interest rates and volatility
Fixed income historically was the land of relative calm and low volatility. The secular decline in interest rates over the last several decades has provided a highly accommodating tailwind for fixed income portfolios. This was especially true for long-only, passive, index, or closet-index type funds. However, as the Investment Grade corporate index and the Bloomberg Barclays AGG both reached extended levels of duration, their heightened sensitivity to changes in interest rates came at an inopportune time. The charts below illustrate the significant rise in duration over the last several years for the Bloomberg Barclays US Corporate Index and the Bloomberg Barclays US Aggregate Bond Index.
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