A Tale of Two Drawdowns

2022 was the worst year on record for investment grade corporate bonds largely due to a dramatic increase in interest rates. With this recency bias and the markets focused on the actions of the US Federal Reserve, many investors have looked to other income producing asset classes as a replacement for their corporate bonds. While these asset classes may have outperformed in a rate hiking event, it is important to remember that these other asset classes have a risk profile all their own during a credit event.