US interest rates look set to rise in 2015, and that’s unsettling for some fixed-income investors. But here’s the good news: US bonds aren’t the only game in town. (more…)
By Michael DePalma (pictured) and Arnab Nilim
Multi-asset strategies like risk parity owe much of their popularity to their ability to navigate the global financial crisis. Lately, critics have cited levered bond returns as the driver—and as a looming headwind. We think they’re missing a key point.
In late 2013, the 10-year US Treasury yield hit 3%, spooking investors who thought the bond bubble was bursting. Prognosticators urged investors to abandon bonds. And then—they waited. (more…)
The muni market seems to be returning to normal after major outflows last summer, though several potential hot-button issues could still spook investors. We don’t think these represent major risks to market returns or properly positioned portfolios. (more…)
Capital markets could get a jolt if the US Federal Reserve raises interest rates faster and farther than expected. But we don’t think there would be a major sell-off in risk assets, and there are several ways for investors to play the possibilities.
After a sharp five-year rally in US real estate stocks, investors are questioning whether they may be vulnerable to a rise in interest rates. Our research suggests that global real estate stocks may be more likely to weather a changing rate environment. (more…)
To protect their portfolios from rising interest rates and volatility, many high-yield investors have headed for short-duration strategies. We think some of the more popular approaches may expose investors to bigger hazards than they realize.
Though they’ve defied expectations this year, higher interest rates appear to be all but inevitable. Investors need to take measure of the rate sensitivity in their portfolios—and stay agile—to negotiate the rough market crosscurrents a rate reversal may bring.
High-yield bonds’ attractive income has made them popular in today’s low-rate environment. But market complacency has caused callable-bond investors to ignore a lurking risk: duration extension in a rising-rate scenario.