As interest rates rise, investors should rethink their fixed income approach
Investors looking for an opportunity to increase yield while rates remain historically low, and simultaneously position their portfolios for potentially rising rates, may want to take a closer look at floating rate loans. Floating rate loans are liquid, shorter-term assets that carry a floating rate coupon and can provide compelling income with zero duration risk.
Fixed income exchange-traded funds (ETFs) are poised to take on a bigger role in institutional portfolios, according to a new report.
Investment consultants, institutional asset owners and intermediaries worldwide forecast significant fixed income restructuring this year amid concern about rising interest rates and a jump in real assets investing, according to a survey.
Fixed income investors are faced with something of a catch-22. On the one hand, interest rates remain relatively low despite some recent increases, and when market prognosticators predict a change, continuing anemic economics seem to extend the low-rate environment. On the other hand, most agree that rates must go up sometime, and the threat of a rising rate environment makes many investors wary of taking on any fixed income which comes with significant duration risk.
In the end, ETFs show it was all about duration.
West Face Capital has launched the West Face Alternative Credit Fund Group, designed to invest primarily in privately negotiated credits.
Last year was a dream come true for pension funds, and 2014 may be another good year.
Six principles for managing credit risk in volatile times
