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Interest Rate Sensitivity of Investment-Grade Debt

$113 billion bet on high-grade debt may put investors at particular risk as interest rates rise.

By Lisa Abramowicz | Updated on November 14, 2014

There’s about US$113 billion that seems to be betting on a growth slowdown instead of higher interest rates.

That’s how much mutual-fund investors have poured into investment-grade bond funds this year—more than they’ve deployed in equities, junk-rated securities, or money-market funds, according to data compiled by Wells Fargo & Co. Investors have been attracted to the debt’s relatively safe credit quality, fueling gains of 6.8 percent for highly rated U.S. company bonds in 2014.

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