Investors are increasingly worried about the growing size of the BBB-rated corporate bond market, the lowest tier of investment grade (IG) debt. The risk is that much of this segment could be downgraded to high yield (HY) when the next economic downturn occurs. Passive investors would be the most exposed because they would have to sell these “fallen angels” when they exit their respective IG bond index. This tends to be when credit spreads peak and bond prices trough, resulting in the highest crystallized loss. Although not all active managers will outperform, the risks of passive investing are greater now than they have ever been.