All investments are subject to market risk, including possible loss of principal.
A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. Credit rating agencies typically assign letter grades to indicate ratings. Standard & Poor’s, for instance, has a credit rating scale ranging from AAA (excellent) and AA+ to C and D. A debt instrument with a rating below BBB- is considered to be speculative or non-investment grade.
Active management is the use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund’s portfolio. Active management strategies typically have higher fees than passive management.
A fallen angel is a bond that was once rated as investment grade but has fallen to junk-bond status because of the issuing company‘s poor credit quality.
A rising star is a bond that is rated as a junk bond but could become investment grade because of improvements in the issuing company‘s credit quality.
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