We all know that when interest rates go up, bond prices go down. More specifically, long-term bond prices go down. What we do not hear much about is what happens with the other major fixed income assets when interest rates go up. In the chart below we can see that preferred shares, US high yield bonds, and emerging market bonds, did just fine in between June 6th and July 31st even though the Bank of Canada raised its overnight lending rate to 0.75% on July 12th. The lesson is here to make sure we have exposure to all of the major fixed income assets in order to protect the fixed side of the portfolio under any interest rate scenario.