In the fixed income world investors often talk about “the spread” as one possible driver of returns. But what is “the spread” and why does it exist? Generally speaking, the spread in interest rates which is also called “credit spread” refers to the difference between two interest rates, often between a benchmark rate (normally the interest rate of government bonds) and a specific interest rate on another type of bond (such as corporate bonds). For example, if a 10-year government bond has a 3% interest rate and a corporate bond of similar duration has a 5% interest rate, the spread

Corporate investment-grade debt funds (including both conventional mutual funds and ETFs) have suffered $113.8 billion in year-to-date outflows. This figure would already break the annual outflow record by nearly $100 billion. Investment grade (IG) corporate debt funds broke their all-time calendar year records during their 2020 and 2021 campaign (+$266.7 billion and +$274.4 billion, respectively). If the tides do not turn quickly, IG funds will only log their second calendar year outflow. While recent performance may be trending upward, year-to-date performance has been dismal. Lipper Corporate Debt A-Rated Funds have realized a negative 11.06%, while Lipper Short Investment Grade Debt