Citi Global Wealth PUTTiNG YoUr CASH To worK iN A HiGHer rATe eNviroNMeNT | | 36 Investments Investment-grade credit FiGUre 3. SHorT-TerM CorPorATe YieLDS HAve CLiMBeD SHArPLY Corporate bonds have higher rates than 10 Treasuries, depending on their relative credit 9 risk. From a repayment perspective, the least US Corporate risky of these would be short-term investment- 8 Bond (1-3yr) yield grade–related (IG) bonds issued by large, healthy companies with low levels of debt compared 7 to earnings. In contrast, lower rated high-yield bonds with higher levels of debt to earnings ) 6 generally have more repayment risk. The short- % term IG index comprises debt of 1- to 3-year ( 5 d maturities, with low average duration – or price l e sensitivity to interest rate changes – of about i Y 4 1.9 years. The IG index currently yields about 5.34%, almost 1% above comparable maturity 3 (i.e., 2 year) Treasury bonds – FIGURE 3. 2yr US Besides investing in an index, investors may 2 Treasury consider owning individual bonds, as there may 1 yield be higher yield levels on individual IG-rated bonds for investors who understand the credit 0 risk of the issuer. An index is an “average” of '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 yields, so today there are numerous examples of high-quality credits that pay above index yields. Source: Bloomberg, as of 21 Nov 2022. Past performance is no guarantee of future results. Real results may vary. Indices are unmanaged. An For example, many of the largest US banks investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific currently have bonds of less than three years’ investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. See Glossary for definitions. maturity that yield near or above 5%. For those Chart shows the yields on US short-term investment-grade corporate fixed income and 2-year US Treasuries. wishing to seek returns above those of the index, actively managed fixed income strategies are a wise consideration.