Bond Funds Drift Into Risky Debt, Adding to Angst Over Liquidity

  • Investment-grade funds reach for yield with lower-grade bonds
  • Returns are better. But what about the risks involved?

At Natixis SA-backed H20 Asset Management in London, concern over investments in unrated bonds helped spur billions of dollars’ worth of withdrawals in a matter of days.

Photographer: Martin Barzilai/Bloomberg
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What’s really inside bond funds these days?

The answer, for many of them, is more risk than there used to be.