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U.S. Equity Funds Seeking Shelter From High Corporate Debt

Some potential ways to cut risk while maintaining equity exposure.

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A version of this article was published in the June 2018 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting the website.

There's some evidence that U.S. companies are deleveraging, but overall corporate debt remains on par with levels during the 2007-09 financial crisis. U.S. companies feasted on ultralow interest rates after the credit crisis a decade ago, borrowing not only to invest in their businesses but also to buy back shares and pay dividends. According to the Federal Reserve, total U.S. corporate debt was equal to 45.2% of U.S. gross domestic product in 2018's first quarter, down a tenth of a percentage point from six months prior.

Kevin McDevitt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.