If a spate of investment-grade-to-junk downgrades ensues, WFIG could be well-positioned to endure that storm.
“As of the end of September 2018, only 0.67% of the investment-grade index was downgraded to junk status over the trailing 12 months,” according to WisdomTree. “Put another way, this period ranks in the 90th percentile among the most benign periods in the last 20 years. In our view, should the current trend begin to normalize, the WisdomTree Fundamental U.S. Corporate Bond Index could provide a defensive stance to better weather the performance impact of bonds falling to junk.”
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