Senior loans and high-yield bonds posted a strong first half of 2015, outperforming fixed-income instruments that are more rate sensitive as well as equities (see table on page 3). Much of this strong performance can be attributed to senior loans and high-yield bonds beginning the year at very attractive valuations, after a healthy bout of volatility in the back half of 2014. In addition, the strong relative performance has come as the rhetoric continues to build around the U.S. Federal Reserve (the "Fed") increasing interest rates later this year, which has served to pressure the returns of the more rate sensitive areas of fixed-income (investment grade corporate bonds, U.S. Treasuries, etc.).
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