Evaluating Credit Strategies in Rising Rate Environment

As an investment manager at a fixed income investment firm, you are evaluating different credit strategies for your portfolio amidst a volatile economic environment. Recently, concerns have grown about rising interest rates and inflation pressures, which could impact the credit risk of your bond investments.

Your firm has been considering two primary strategies: investing in high-yield bonds versus focusing on investment-grade bonds with shorter maturities. You are tasked with analyzing the potential return and risk implications of each strategy to align with your clients' risk appetite and return expectations.

Which credit strategy is generally considered more appropriate for a portfolio aiming to both mitigate risk and provide stability in a rising rate environment?