With the sharp increase in both interest rates and credit spreads, fixed income funds had their worst ever start to a year. Total returns for US investment grade (IG) bonds stood at -11.5% end of May, while the EUR counterparts gave up slightly less with -8.2%.

Meanwhile, inflation is still way above central bank targets, geopolitical tensions are high and recession fears are mounting, making it difficult to become too excited about risky assets. However, investment grade credit is starting to look attractive again. EUR investment grade bonds currently yield 2.3%, a level not seen since 2013. US IG also offers attractive yields of 4.15%, almost equivalent to the peaks reached in December 2018 or at the Coronavirus pandemic outbreak in March 2020. 

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