Forget About Bond Ratings. This Is the Biggest Fixed-Income Risk.
To study this issue, my research assistants (Huzaifah Shafique and Arnav Pradhan) and I pulled all U.S. dollar-denominated fixed-income mutual-fund data going back 40 years. We then took the average monthly returns across the following fixed-income groupings: short-term Treasury funds (average maturity of six months), long-term Treasury funds (average maturity of 20 years), intermediate Treasury funds (average maturity of six years), world debt funds (average maturity of six years), high-yield corporate debt (average maturity of five years) and investment-grade corporate debt (average maturity of 10 years).
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