Portfolio Prescriptions for Rising Interest Rates

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Advanced Techniques for Managing Interest Rate Exposure

Your clients have at least two options for dealing with rising interest rates. They can face the risk head-on by shorting bonds or investing in inverse bond funds, TRAKRs, gold, currencies, or commodities. Or they can consider ignoring interest rate risk altogether by purchasing fixed annuities. Part 2 of a two-part series.

Duration: Measuring How Bonds Will React to Interest Rates

Comparing bonds is difficult, given the differences in yields, coupon rates, and credit risk. However, one metric—duration—can help you evaluate a bond's sensitivity and devise a strategy for capitalizing on interest rate movements and immunizing portfolios.

The Problems With TIPS

Market pundits have warned investors that interest rates are bound to rise, and the herd is stampeding toward TIPS as a result. Can the market protect everyone against rising inflation?

Protecting the Bond Investor

No matter where you think interest rates are headed, a few defensive moves can help you shield clients' portfolios while still maintaining yield. Best of all, the simple fact that clients know you have a strategy in place can reaffirm their faith, in both you and the market.