With interest rates at historically low levels, and the U.S. economy showing continued strength,

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "With interest rates at historically low levels, and the U.S. economy showing continued strength,"

Transcription

1 Managing Interest Rate Risk in Your Bond Holdings THE RIGHT STRATEGY MAY HELP FIXED INCOME PORTFOLIOS DURING PERIODS OF RISING INTEREST RATES. With interest rates at historically low levels, and the U.S. economy showing continued strength, it was just a matter of time until the Fed moved to raise interest rates. They took the first step at their regularly scheduled December 16, 2015 meeting, voting to raise the benchmark federal funds rate 0.25% the first rate hike in nearly a decade. The Fed cited improving economic data, including healthy employment numbers (the current unemployment rate is a low 5.0%), as the rationale for its decision. THE EFFECT OF RISING RATES ON BOND INVESTORS Rising interest rates generally hurt existing bond prices because they make new, higher-yielding bond issues more attractive, reducing the amount investors are willing to pay for outstanding issues. Conversely, the yield the interest paid by new bonds to investors generally rises along with prevailing rates. The total return for a bond is measured by the yield plus any price appreciation or depreciation if investors sell the bond before it matures. Returns of various types of bonds can vary widely during periods of climbing interest rates, and certain bonds tend to fare better than others. High-quality U.S. Treasury bonds, for example, tend to be particularly sensitive to rising rates because few factors other than interest rate movements affect their yields. Corporate bond prices, on the other hand, typically decline less than Treasury bonds when rates rise because their yields are determined by market demand and are influenced by, among other things, the creditworthiness of the company issuing the bonds. With the Fed s expressed desire to control inflation, the likelihood that we could be entering an extended period of gradually rising interest rates seems a strong possibility, says Mike Loewengart, VP of Investment Strategy for E*TRADE. Over the past 30 years, bonds have had an incredible run, and rates are now sitting near historic lows, Loewengart says. That s not to say that the Fed couldn t ease off at some point. But a look at the numbers certainly suggests a general tightening of monetary policy might be in order. Source: U.S. Treasury Given today s low yields and solid economic fundamentals, investors should make sure that their fixed income holdings are positioned in attempt to keep pace with rising rates. It may be more cost effective, Loewengart says, to position a portfolio at the beginning of a rising interest rate cycle, rather than to wait until after rate hikes begin in earnest. Once rates do begin to rise, however, investors can still take steps in an effort to reduce their portfolio s sensitivity to rate increases. 1

2 UNDERSTANDING THE IMPACT OF RISING RATES Two key bond metrics can help investors understand the relationship between rising interest rates and bond performance: Duration. Interest rates on bonds are typically locked in until the bond matures. So when rates rise, investors holding bonds with longer maturities can t take advantage of that increase because they must wait until their current holdings mature before they can reinvest those assets in a higher-yielding bond. Credit spread. The spread is the difference in yields between lower-risk and higher-risk bonds. Higher-risk bonds generally have lower credit ratings, so they pay more interest in exchange for the investor assuming more risk of default. When interest rates rise, that higher yield can help offset potential price declines. It s important to remember, however, that investing in higheryielding bonds often means taking on more risk that the issuer might not be able to make principal and interest payments as promised. WAYS TO MANAGE INTEREST RATE RISK With the concepts of duration and credit spread in mind, there are two basic strategies that may help certain investors better prepare their fixed income investments for rising interest rates: Choose bonds with shorter durations. Given the risks of locking in longer maturities in a rising rate environment, holding bonds with shorter maturities generally those that mature within five years may help minimize interest rate risks. As an alternative to individual bonds, certain exchange-traded funds (ETFs) and mutual funds focus on short- and ultrashort-term bonds, providing exposure to a diversified basket of bonds with shorter maturities. While risks may differ between individual bonds and bond funds, duration impacts both in a similar manner: the shorter the duration (or average duration in the case of funds), the less price sensitivity an investor would expect. Moreover, an investor might consider building a bond ladder. This entails holding fixed income securities with a wide range of maturities. As the shorter-term bonds mature, the principal can be reinvested in new bonds with yields reflecting the higher prevailing interest rates, thereby cushioning the investor against interest rate risk and providing greater liquidity. Additional benefits can be gained by adding diversity across issuers and credit ratings. Assume more risk. Including bonds in your portfolio with higher yields (and correspondingly lower credit ratings) than Treasury bonds, such as corporate bonds, may help offset the negative effects of rising interest rates. Bonds receive credit ratings based on the market s confidence in the issuer s ability to make timely principal and interest payments as promised. Corporate bonds generally range from investment grade to high yield based on their credit ratings. Given the greater market risks associated with higher-yielding bonds, it s important to diversify across many different issuers and industries. For example, an investor might spread his or her bond portfolio across various long- and short-term corporate and government bonds or for convenience, they might select a broadly diversified bond mutual fund or ETF. Reading the prospectus will give an investor a better idea of a fund s objectives, costs, and holdings. 2

3 REDUCING INTEREST RATE RISK THROUGH DIVERSIFICATION As with all investment strategies, one effective way to help mitigate interest rate risk is to diversify fixed income portfolios across a wide range of different types of bonds and other securities especially those that are traditionally less responsive to interest rate increases. Diversification in a fixed income portfolio may help hedge against rising rates while potentially minimizing the risks of a portfolio that is concentrated in one particular bond issuer or type of security, Loewengart says. Below are several types of fixed income investments that may outperform in a period of rising interest rates: Treasury Inflation-Protected Securities. Often called TIPS, these are bonds that are adjusted semi-annually to the U.S. Consumer Price Index the federal government s key inflation measure. For example, if you buy a $10,000 bond with a yield of 2% but inflation equals 3%, the face value of the bond will be increased by $300 to $10,300. The 2% yield will be paid based on the new, higher value of the bond. While inflation and interest rates aren t directly linked, they tend to rise at the same time, given macroeconomic factors such as a strengthening U.S. economy and more consumer demand for loans. Given the typical relationship between inflation and interest rates, TIPS tend to perform better in rising rate environments. Premium bonds. A premium bond has a coupon that is higher than the prevailing market rate and will trade at a price above par. Premium bonds may return cash at a faster rate than par or discount bonds and thus have shorter durations. In a rising interest rate environment, the investor may reinvest these larger coupon payments at a higher rate. Premium bonds tend to have lower sensitivity to rising interest rates. As a result, they offer additional downside protection by limiting principal erosion. Short-term government bond funds. These mutual funds and ETFs generally keep at least 90% of their holdings in U.S. Treasury bonds with durations of between one and three-and-a-half years. Shorter maturity periods allow their rates to reset more frequently to better keep up with rising rates. They can provide the best of two worlds: offering low credit risk as the securities held by the fund are backed by the full faith and credit of U.S. government while also being very responsive to rising rates. Short-term corporate bond funds. These funds typically invest in a broad range of corporate bonds with durations of one to three-and-a-half years. They may be especially attractive to fairly conservative investors because they tend to be less sensitive to interest rates than portfolios with longer durations. Ultrashort bond funds. These funds focus on bonds with very short durations, generally less than one year. They may include a broad range of fixed income investments, such as corporate or government bonds with very short maturities. However, they typically do not include international, convertible, and high-yield bonds meaning exposure to those sectors must be gained through other funds or ETFs. The focus on very short durations means these funds aim to have reduced interest rate sensitivity, potentially lowering risk and boosting return potential in a rising rate environment. 3

4 High-yield bond funds. These bond funds invest in bonds that are riskier than standard investment-grade corporate bonds because they are issued by companies with lower credit ratings. However, their higher yields may help offset the general underperformance and lagging rates of Treasury bonds when interest rates rise. Mutual funds and ETFs that focus on highyield bonds tend to invest in a broadly diversified portfolio of issues to offset company and sector risk. Though not guaranteed, the prospect of better returns is often an attractive feature for investors willing to take on additional risk in their fixed income holdings. THE BENEFITS OF A PROACTIVE APPROACH Even with the threat of rising interest rates seemingly on the horizon, many fixed income investors can benefit from maintaining an allocation to bonds and other fixed income securities because they may help manage long-term risk in any interest rate environment. Bonds can help reduce overall volatility in a diversified portfolio because their prices historically have moved inversely to stock prices and fluctuated within a narrower range of highs and lows. That said, diversification within a bond allocation and incorporating bonds and other fixed income investments that tend to rise along with interest rates may help fixed income investments better keep pace with rate increases and attempt to take advantage of U.S. and international economic growth. INVESTOR INSIGHT RECAP Investors shouldn t necessarily sell bonds simply because of price declines. Selling a bond after its price drop means that loss may be realized; waiting until maturity means the investor will receive the promised return. Investors shouldn t try to predict interest rates movements. Instead, they may wish to consider a bond-laddering strategy, including intermediate and long-term bonds, in an effort to reduce the impact of interest-rate risk and help provide more consistent income and better price stability. Investors can use ETFs and mutual funds to gain exposure to a broad diversification of different types of bonds from different issuers, including government, corporate, high-yield and foreign bonds. Investors should review their entire fixed income portfolio to help ensure that they have a properly balanced portfolio based on their income needs, investment objectives, financial circumstances, and risk preferences. To learn more about strategies that seek to protect your portfolio against inflation using bond funds, click here (login required). Visit the Fixed Income Solutions Center to learn more about individual bonds (login required). 4

5 All investments involve risk, including loss of principal amount invested. For more detailed discussion about the risks of investing in a mutual fund or ETF, as well as the fund s investment objectives, policies, charges, and expenses, please read the fund s prospectus. This article is distributed for informational purposes only. It contains current opinions of E*TRADE Capital Management, LLC. The investment ideas and expressions of opinion may contain forward looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell securities. E*TRADE Capital Management s statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. Each investor should consider his or her unique personal objectives, risk tolerances and time horizons when making investment decisions. Past performance is not an indication of future returns. Diversification strategies do not ensure a profit and cannot protect against losses in a declining market. All investments involve risk, including the loss of principal amount invested. Data and statistics contained in this commentary are obtained from what E*TRADE Capital Management considers to be reliable sources; however, its accuracy, completeness, or reliability cannot be guaranteed. Stocks fluctuate in response to the activities of individual companies and general market conditions, domestically and abroad. Investments in mid and small-cap stocks typically have higher risk characteristics than large cap stocks and may be subject to greater price fluctuations than large-cap stocks. There are risks associated with fixed income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. Lower-quality fixed-income securities generally offer higher yields, but also carry more risk of default or price changes due to potential changes in the credit quality of the issuer. Municipal Bonds are subject to market and interest rate risk if sold prior to maturity. Treasury securities are guaranteed by the US government as to timely payment of principal and interest. A bond ladder is a portfolio of fixed-income securities that mature at regular, staggered intervals. You can also build a ladder with brokered CDs. Laddering is an investment technique that seeks to generate income based on an investor s unique situation, whether to support ongoing cash flow needs or plan for those expected to arise in the future. It can also reduce one s exposure to interest rate fluctuations. Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations, all of which may be magnified in emerging markets. Indices used in this presentation are intended to provide a general measure of the market performance for a particular asset class or type. An Index is an unmanaged portfolio of predetermined securities and does not reflect any initial or ongoing expenses such as brokerage fees, commissions, principal mark-ups, management fees or taxes. The inclusion of any one of these items would reduce the performance shown. It is not possible to invest directly in an index. Full portfolio management and advisory services are offered through E*TRADE Capital Management, an investment adviser registered with the Securities and Exchange Commission. Upon request, we will send you a free copy of E*TRADE Capital Management s Form ADV Part 2A, which describes, among other things, affiliations, services offered and fees charged. Prior to investing in a managed account, E*TRADE Capital Management will obtain important information about your financial situation and risk tolerances and provide you with an account information package, which includes a detailed investment proposal, the investment advisory agreement, and wrap fee program brochure. These documents contain important information that should be read carefully before enrolling in an investment advisory managed account program. 5

6 PLEASE READ THE IMPORTANT DISCLOSURES BELOW. The fund s prospectus contains its investment objectives, risks, charges, expenses and other important information and should be read and considered carefully before investing. For a current prospectus, visit or visit the Exchange-Traded Funds Center at Investments in money market mutual funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Exchange-traded funds [ETFs] are subject to risks similar to those of other diversified portfolios. Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. Also, there are brokerage commissions associated with trading ETFs that may negate their low management fees. ETFs are required to distribute their portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Investing outside the United States involves additional risks related to currency fluctuations, economic and political differences and difference in accounting standards. There are additional risks of investing in emerging market countries. Investing in Commodities, REITS, and International or Global investments carries certain risks such as price volatility, currency risk, market risk, interest rate risk and credit risk. An investor should fully understand these risks before making an investment. All bonds are subject to interest rate risk and you may lose money. Bonds sold by issuers with lower credit ratings may offer higher yields than bonds issued by higher rated or investment grade issuers, but are usually associated with higher risks. High yield bonds, also known as junk bonds, generally have a greater risk of default, which increases the risk that an issuer may be unable to pay interest and principal on the issue. In addition, high yield bonds tend to have higher interest rate risk and liquidity risk, particularly in volatile market conditions, which makes it more difficult to sell the bonds. Before investing in high yield bonds, you should carefully consider and understand the risks associated with investing in high yield bonds. 6

Your guide to investing for retirement with Fidelity Freedom Index Funds Class W.

Your guide to investing for retirement with Fidelity Freedom Index Funds Class W. Funds Class W Your guide to investing for retirement with Fidelity Freedom Index Funds Class W. An all-in-one approach for simple investing. You may already know how important your workplace savings can

More information

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests a guide to Bond Mutual Funds A bond mutual fund is an investment company that pools money from shareholders and invests primarily in a diversified portfolio of bonds. Table of Contents What Is a Bond?...

More information

Market Linked Certificates of Deposit

Market Linked Certificates of Deposit Market Linked Certificates of Deposit This material was prepared by Wells Fargo Securities, LLC, a registered brokerdealer and separate non-bank affiliate of Wells Fargo & Company. This material is not

More information

What you will learn today. Different categories of investments Choosing your investment mix Common investor pitfalls Determining your next steps

What you will learn today. Different categories of investments Choosing your investment mix Common investor pitfalls Determining your next steps Investing 101 What you will learn today Different categories of investments Choosing your investment mix Common investor pitfalls Determining your next steps 2 Asset Allocation One of Your Most Important

More information

How to manage your fixed-income investments when interest rates rise

How to manage your fixed-income investments when interest rates rise How to manage your fixed-income investments when interest rates rise April 2015 Begin by taking a thoughtful approach. Consider total return and not just current yields. Make sure you maintain portfolio-wide

More information

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios

More information

Exchange Traded Funds

Exchange Traded Funds LPL FINANCIAL RESEARCH Exchange Traded Funds February 16, 2012 What They Are, What Sets Them Apart, and What to Consider When Choosing Them Overview 1. What is an ETF? 2. What Sets Them Apart? 3. How Are

More information

Your guide to investing for retirement with Fidelity Freedom K Funds.

Your guide to investing for retirement with Fidelity Freedom K Funds. Fidelity Freedom K Funds Your guide to investing for retirement with Fidelity Freedom K Funds. An all-in-one approach for simple investing. You may already know how important your workplace savings can

More information

BlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk

BlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk BlackRock Diversified Income Portfolio A portfolio from Fidelity Investments designed to seek income while managing risk Fidelity Investments has formed a strategic alliance with BlackRock Investment Management,

More information

BOND ALERT. What Investors Should Know. July 2013 WWW.LONGVIEWCPTL.COM 2 MILL ROAD, SUITE 105

BOND ALERT. What Investors Should Know. July 2013 WWW.LONGVIEWCPTL.COM 2 MILL ROAD, SUITE 105 BOND ALERT July 2013 What Investors Should Know This special report will help you understand the current environment for bonds and discuss how that environment may change with rising interest rates. We

More information

Impact of rising interest rates on preferred securities

Impact of rising interest rates on preferred securities Impact of rising interest rates on preferred securities This report looks at the risks preferred investors may face in a rising-interest-rate environment. We are currently in a period of historically low

More information

Is it time to hire a professional to manage your bonds?

Is it time to hire a professional to manage your bonds? Is it time to hire a professional to manage your bonds? Today s bond markets are more complex Finding the right bonds can be difficult. The bond markets are large and complex, and it takes a lot of homework

More information

INVESTMENT TERM GLOSSARY

INVESTMENT TERM GLOSSARY A Accrued Interest - Interest that has been earned but not yet credited to a bond or other fixed-income investment, such as a certificate of deposit. Active Management The use of professional investment

More information

U.S. Treasury Securities

U.S. Treasury Securities U.S. Treasury Securities U.S. Treasury Securities 4.6 Nonmarketable To help finance its operations, the U.S. government from time to time borrows money by selling investors a variety of debt securities

More information

Investing. Mutual Fund. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567

Investing. Mutual Fund. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567 Mutual Fund Investing Your promotional imprint here and/or back cover. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567 Mutual funds are one of the most popular ways

More information

ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015

ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015 ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015 Before you invest in the AdvisorShares Fund, you may want to review the Fund s prospectus and statement of additional

More information

Fixed Income Investing

Fixed Income Investing Fixed Income Investing Why Invest in Fixed Income Fixed income securities (bonds) are a fundamental part of an investing plan for most investors. There are many types of bonds along with varied approaches

More information

SHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE. BKLN PowerShares Senior Loan Portfolio

SHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE. BKLN PowerShares Senior Loan Portfolio SHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE PowerShares Senior Loan Portfolio PowerShares Senior Loan Portfolio is the first senior loan exchange-traded fund (ETF) and seeks investment results

More information

FIXED INCOME STRATEGIES FOR A RISING INTEREST RATE ENVIRONMENT

FIXED INCOME STRATEGIES FOR A RISING INTEREST RATE ENVIRONMENT FIXED INCOME STRATEGIES FOR A RISING INTEREST RATE ENVIRONMENT John Donovan, Head of Fixed Income and Trading As the Federal Reserve and other central banks wind down their fiscal stimulus programs, we

More information

RETIREMENT INSIGHTS. Is It Time to Rebalance Your Plan Investments? Mutual Fund Categories: A Primer for New Investors

RETIREMENT INSIGHTS. Is It Time to Rebalance Your Plan Investments? Mutual Fund Categories: A Primer for New Investors RETIREMENT INSIGHTS July 2014 Your HFS Team Heffernan Financial Services 188 Spear Street, Suite 550 San Francisco, CA 94105 800-437-0045 rebeccat@heffgroup.com www.heffgroupfs.com CA Insurance Lic# 0I18899

More information

INVESTING MADE SIMPLE

INVESTING MADE SIMPLE Investing Fundamentals INVESTING MADE SIMPLE AN EDUCATIONAL GUIDE FOR EVERY INVESTOR. INVEST WITH CONFIDENCE. HuntingtonFunds.com 1 1 Your Guide to the Basics of Investing Through Mutual Funds Mutual funds

More information

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst White Paper: NPH Fixed Income Research Update Authored By: Bob Downing, CFA NPH Senior Investment & Due Diligence Analyst National Planning Holdings, Inc. Due Diligence Department National Planning Holdings,

More information

Liquidity Tiering for Higher Yields in the Tax-Free Market

Liquidity Tiering for Higher Yields in the Tax-Free Market January 2013 Liquidity Tiering for Higher Yields in the Tax-Free Market In today s low-yield environment, investors need a fresh approach to managing their portfolios for higher income. Liquidity tiering

More information

Glossary of Investment Terms

Glossary of Investment Terms online report consulting group Glossary of Investment Terms glossary of terms actively managed investment Relies on the expertise of a portfolio manager to choose the investment s holdings in an attempt

More information

High-Yield Spread U.S. 10-Year Treasury Yield Investment Grade Spread

High-Yield Spread U.S. 10-Year Treasury Yield Investment Grade Spread WisdomTree ETFs BOFA MERRILL LYNCH HIGH YIELD BOND ZERO DURATION FUND HYZD The U.S. high-yield bond market has been one of the best-performing subsets of the fixed income investable universe over the past

More information

TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP. Supplement to the Currently Effective Prospectus and Summary Prospectus

TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP. Supplement to the Currently Effective Prospectus and Summary Prospectus TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP Supplement to the Currently Effective Prospectus and Summary Prospectus * * * The following replaces in their entirety the

More information

Guggenheim BulletShares ETFs An In-Depth Look at Defined Maturity ETFs

Guggenheim BulletShares ETFs An In-Depth Look at Defined Maturity ETFs Guggenheim BulletShares ETFs An In-Depth Look at Defined Maturity ETFs Contents I. A Whole New Range of Opportunities for Investors 1 II. A New Era in Fixed Income Investing 2 III. Understanding Fund Distributions

More information

Slide 2. What is Investing?

Slide 2. What is Investing? Slide 1 Investments Investment choices can be overwhelming if you don t do your homework. There s the potential for significant gain, but also the potential for significant loss. In this module, you ll

More information

Prospectus Socially Responsible Funds

Prospectus Socially Responsible Funds Prospectus Socially Responsible Funds Calvert Social Investment Fund (CSIF) Balanced Portfolio Equity Portfolio Enhanced Equity Portfolio Bond Portfolio Money Market Portfolio Calvert Social Index Fund

More information

Fixed-income opportunities for the current market A potential measure of protection from rising rates and inflation

Fixed-income opportunities for the current market A potential measure of protection from rising rates and inflation Taxable Fixed-Income Fixed-income opportunities for the current market A potential measure of protection from rising rates and inflation Interest rates have been at historic lows for some time and are

More information

Fixed-income opportunity: Short duration high yield

Fixed-income opportunity: Short duration high yield March 2014 Insights from: An income solution for a low or rising interest-rate environment Generating income is a key objective for many investors, and one that is increasingly difficult to achieve in

More information

Investing in Bonds - An Introduction

Investing in Bonds - An Introduction Investing in Bonds - An Introduction By: Scott A. Bishop, CPA, CFP, and Director of Financial Planning What are bonds? Bonds, sometimes called debt instruments or fixed-income securities, are essentially

More information

Guide to mutual fund investing. Start with the basics

Guide to mutual fund investing. Start with the basics Guide to mutual fund investing Start with the basics Pursue your financial goals Why do you invest? For a rainy day? A secure retirement? Funding a college tuition? Having a specific goal in mind will

More information

Investing Toward Retirement

Investing Toward Retirement ONS Congress 2013 Investing Toward Retirement Janet L Marcantonio, CFP, CRPC Thomas Robinson, CFP Marcantonio Robinson Wealth Advisory Group UBS Financial Services 1 Learning objectives Understand the

More information

Preparing Your Fixed Income Portfolio for Rising Interest Rates

Preparing Your Fixed Income Portfolio for Rising Interest Rates fixed income portfolio august 2013 2 Bond Fundamentals 3 Products to Hedge Interest Rates 4 Strategies to Mitigate the Effect of Rising Rates 6 Investment Considerations Preparing Your Fixed Income Portfolio

More information

Yield Curve September 2004

Yield Curve September 2004 Yield Curve Basics The yield curve, a graph that depicts the relationship between bond yields and maturities, is an important tool in fixed-income investing. Investors use the yield curve as a reference

More information

RISK ASSESSMENT QUESTIONNAIRE

RISK ASSESSMENT QUESTIONNAIRE Time Horizon 6/14 Your current situation and future income needs. 1. What is your current age? 2. When do you expect to start drawing income? A Less than 45 A Not for at least 20 years B 45 to 55 B In

More information

Investing for rising interest rates

Investing for rising interest rates Strategies for fixed-income investors Investing for rising interest rates Rising interest rates can have a significant negative effect on the value of fixed-income investments because interest rates and

More information

I.A.M. National 401(k) Plan. Investment Options Summary

I.A.M. National 401(k) Plan. Investment Options Summary I.A.M. National 401(k) Plan Investment Options Summary The I.A.M. National 401(k) Plan offers a diverse investment lineup to meet the varied needs of our participants. The lineup includes 12 Retirement

More information

YOUR GUIDE TO GETTING STARTED

YOUR GUIDE TO GETTING STARTED George Mason University Cash Match Plan (#72170) Invest in your retirement and yourself today, with help from The George Mason 401(a) Match Plan and Fidelity. YOUR GUIDE TO GETTING STARTED Invest some

More information

CHOOSE YOUR PATH. ENSURE THEIR FUTURE.

CHOOSE YOUR PATH. ENSURE THEIR FUTURE. CHOOSE YOUR PATH. ENSURE THEIR FUTURE. Investment Option Basics An overview of the CollegeAdvantage Direct 529 Savings Plan investment options. TABLE OF CONTENTS CHOOSE YOUR APPROACH...1 KNOW YOUR GOALS...2

More information

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale)

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Summary Prospectus October 30, 2015 Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Before you invest, you may want to review the Fund s Prospectus, which

More information

smart Two Paths to Investing for Retirement Which one is right for you? Massachusetts Deferred Compensation SMART Plan INVEST

smart Two Paths to Investing for Retirement Which one is right for you? Massachusetts Deferred Compensation SMART Plan INVEST smart S A V E M O N E Y A N D R E T I R E T O M O R R O W INVEST Two Paths to Investing for Retirement Which one is right for you? Massachusetts Deferred Compensation SMART Plan Office of the State Treasurer

More information

Important Information about Closed-End Funds and Unit Investment Trusts

Important Information about Closed-End Funds and Unit Investment Trusts Robert W. Baird & Co. Incorporated Important Information about Closed-End Funds and Unit Investment Trusts Baird has prepared this document to help you understand the characteristics and risks associated

More information

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016.

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016. NUVEEN INTELLIGENT RISK CONSERVATIVE ALLOCATION FUND SUPPLEMENT DATED APRIL 18, 2016 TO THE SUMMARY PROSPECTUS DATED DECEMBER 31, 2015 Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated

More information

9 Questions Every ETF Investor Should Ask Before Investing

9 Questions Every ETF Investor Should Ask Before Investing 9 Questions Every ETF Investor Should Ask Before Investing 1. What is an ETF? 2. What kinds of ETFs are available? 3. How do ETFs differ from other investment products like mutual funds, closed-end funds,

More information

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 Investment Adviser: RidgeWorth Investments A Shares C Shares I Shares Aggressive Growth Allocation Strategy SLAAX CLVLX CVMGX Conservative

More information

Deutsche Alternative Asset Allocation VIP

Deutsche Alternative Asset Allocation VIP Alternative Deutsche Alternative Asset Allocation VIP All-in-one exposure to alternative asset classes : a key piece in asset allocation Building a portfolio of stocks, bonds and cash has long been recognized

More information

T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates

T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates Michael J. Bacevich Portfolio Manager The Hartford Floating Rate Fund John P. Connor Portfolio Manager The Hartford

More information

Brokered certificates of deposits

Brokered certificates of deposits Brokered certificates of deposits A guide to what you should know before you buy Are brokered CDs right for you? Brokered CDs are designed for investors who: Want access to a wide selection of issuers

More information

Determining your investment mix

Determining your investment mix Determining your investment mix Ten minutes from now, you could know your investment mix. And if your goal is to choose investment options that you can be comfortable with, this is an important step. The

More information

Nine Questions Every ETF Investor Should Ask Before Investing

Nine Questions Every ETF Investor Should Ask Before Investing Nine Questions Every ETF Investor Should Ask Before Investing UnderstandETFs.org Copyright 2012 by the Investment Company Institute. All rights reserved. ICI permits use of this publication in any way,

More information

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth.

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth. Wealth for Life Glossary Aggressive growth fund: A mutual fund that aims for the highest capital gains. They often invest in smaller emerging companies that offer maximum growth potential. Adjustable Rate

More information

A Guide To DEFINED FOCUSED DISCIPLINED

A Guide To DEFINED FOCUSED DISCIPLINED A Guide To F I R S T T R U S T U N I T I N V E S T M E N T T R U S T S DEFINED FOCUSED DISCIPLINED W H A T I S A U N I T I N V E S T M E N T T R U S T? U I T F E A T U R E S A unit investment trust or

More information

Retirement Balanced Fund

Retirement Balanced Fund SUMMARY PROSPECTUS TRRIX October 1, 2015 T. Rowe Price Retirement Balanced Fund A fund designed for retired investors seeking capital growth and income through investments in a combination of T. Rowe Price

More information

SFDCP TARGET DATE FUND PORTFOLIO SUMMARY: January 29, 2016

SFDCP TARGET DATE FUND PORTFOLIO SUMMARY: January 29, 2016 SFDCP TARGET DATE FUND PORTFOLIO SUMMARY: January 29, 2016 SFDCP Target Date Funds Overview SFDCP Target Date Funds (each, a Fund and collectively the Funds or the SFDCP Target Date Funds ) were developed

More information

Learn about bond investing. Investor education

Learn about bond investing. Investor education Learn about bond investing Investor education The dual roles bonds can play in your portfolio Bonds can play an important role in a welldiversified investment portfolio, helping to offset the volatility

More information

GUIDE TO INVESTING IN MARKET LINKED CERTIFICATES OF DEPOSIT

GUIDE TO INVESTING IN MARKET LINKED CERTIFICATES OF DEPOSIT GUIDE TO INVESTING IN MARKET LINKED CERTIFICATES OF DEPOSIT What you should know before you buy What are Market Linked CDs? are a particular type of structured investment issued by third-party banks. A

More information

Human Energy. Yours. TM. New Investment Choices in Your ESIP. Your Wealth. New Investment Choices in Your ESIP 1

Human Energy. Yours. TM. New Investment Choices in Your ESIP. Your Wealth. New Investment Choices in Your ESIP 1 Human Energy. Yours. TM New Investment Choices in Your ESIP Your Wealth. New Investment Choices in Your ESIP 1 New Investment Choices in Your ESIP How you invest the money you save in the ESIP is one of

More information

Mutual Funds Made Simple. Brighten your future with investments

Mutual Funds Made Simple. Brighten your future with investments Mutual Funds Made Simple Brighten your future with investments About Invesco Aim When it comes to investing, your sights are set on a financial summit a college diploma, new home or secure retirement.

More information

KKM ARMOR Fund Class A Shares (Symbol: RMRAX) Class I Shares (Symbol: RMRIX)

KKM ARMOR Fund Class A Shares (Symbol: RMRAX) Class I Shares (Symbol: RMRIX) KKM ARMOR Fund Class A Shares (Symbol: RMRAX) Class I Shares (Symbol: RMRIX) KKM U.S. Equity ARMOR Fund Class A Shares (Symbol: UMRAX) Class I Shares (Symbol: UMRIX) Prospectus June 2, 2014 The U.S. Securities

More information

Preparing for a Rise in Interest Rates

Preparing for a Rise in Interest Rates Strategies for fixed-income investors Preparing for a Rise in Interest Rates Today s historically low interest rates probably won t last forever. Rising interest rates can have a significant negative effect

More information

MainStay VP Janus Balanced Portfolio

MainStay VP Janus Balanced Portfolio Summary Prospectus May 1, 2015 MainStay VP Janus Balanced Portfolio To Statutory Prospectus To Statement of Additional Information Before you invest, you may want to review the Portfolio's Prospectus,

More information

IU Retirement Plan (57524) Start investing in yourself today, with help from IU Retirement Plan and Fidelity.

IU Retirement Plan (57524) Start investing in yourself today, with help from IU Retirement Plan and Fidelity. IU Retirement Plan (57524) Start investing in yourself today, with help from IU Retirement Plan and Fidelity. Invest some of what you earn today for what you plan to accomplish tomorrow. Dear Indiana University

More information

Unit Investment Trusts

Unit Investment Trusts a guide to Unit Investment Trusts A unit investment trust (UIT) is a registered investment company that buys and holds a generally fixed portfolio of stocks, bonds, or other securities. Table of Contents

More information

It s your retirement.

It s your retirement. MNDCP It s your retirement. Keep it on target. And keep it simple. 1 Click to learn more! Looking for an easier way to invest for retirement? With these three simple steps, you can save more, invest wisely

More information

Personal Risk Profile and Asset Allocation A Guide to Investing Variable Product Series. Building your future with a secure partner

Personal Risk Profile and Asset Allocation A Guide to Investing Variable Product Series. Building your future with a secure partner Personal Risk Profile and Asset Allocation A Guide to Investing Variable Product Series Building your future with a secure partner SM Kansas City Life Insurance Company Investment basics Taking personal

More information

BOND FUNDS L SHARES. October 1, 2004

BOND FUNDS L SHARES. October 1, 2004 BOND FUNDS A SHARES L SHARES October 1, 2004 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND FLORIDA TAX-EXEMPT BOND FUND GEORGIA TAX-EXEMPT BOND FUND HIGH INCOME FUND INVESTMENT

More information

WST ASSET MANAGER U.S. EQUITY FUND

WST ASSET MANAGER U.S. EQUITY FUND Prospectus December 18, 2015 WST ASSET MANAGER U.S. EQUITY FUND Investor Shares (Ticker Symbol: WSTEX) Institutional Shares (Ticker Symbol: WSTIX) WST ASSET MANAGER U.S. BOND FUND Investor Shares (Ticker

More information

Financial Wellness & Education. Understanding mutual funds

Financial Wellness & Education. Understanding mutual funds Financial Wellness & Education Understanding mutual funds Benefits of mutual funds Foresters Financial Services provides everyday families and individuals with financial solutions, guidance and tools,

More information

401(k) Savings Plan Investment Fund Profiles Detailed Information on the JPMorgan Chase 401(k) Savings Plan Investment Funds

401(k) Savings Plan Investment Fund Profiles Detailed Information on the JPMorgan Chase 401(k) Savings Plan Investment Funds 401(k) Savings Plan Investment Fund Profiles Detailed Information on the JPMorgan Chase 401(k) Savings Plan Investment Funds Effective December 31, 2013 Please Note: Any significant subsequent updates

More information

PNC Target Date Funds. Making Saving for Retirement Simpler for You

PNC Target Date Funds. Making Saving for Retirement Simpler for You PNC Target Date Funds Making Saving for Retirement Simpler for You Walking With You on the Path to Retirement We understand that with the number and variety of retirement savings options available to you,

More information

January 2008. Bonds. An introduction to bond basics

January 2008. Bonds. An introduction to bond basics January 2008 Bonds An introduction to bond basics The information contained in this publication is for general information purposes only and is not intended by the Investment Industry Association of Canada

More information

Spectrum of Investment Options

Spectrum of Investment Options Kentucky Deferred Comp Spectrum of Investment Options Your guide to available investment options. Tier 1 Target Date Funds, Balanced Fund Target Date Funds Vanguard Target Retirement Funds (in five-year

More information

Making Sense of Market Volatility: Retirement Planning Strategies for the Everyday Investor. October, 2008

Making Sense of Market Volatility: Retirement Planning Strategies for the Everyday Investor. October, 2008 Making Sense of Market Volatility: Retirement Planning Strategies for the Everyday Investor October, 2008 1 Market Ups and Downs Recent news is full of anxiety-causing developments: Credit crunch Bank

More information

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income? Fixed income investments make up a large proportion of the investment universe and can form a significant part of a diversified portfolio but investors are often much less familiar with how fixed income

More information

Mutual Fund Investing Exam Study Guide

Mutual Fund Investing Exam Study Guide Mutual Fund Investing Exam Study Guide This document contains the questions that will be included in the final exam, in the order that they will be asked. When you have studied the course materials, reviewed

More information

Investing Offers Rewards And Poses Risks. Investment Basics: The Power of Compounding. How Do Americans Invest Their Savings? (HA)

Investing Offers Rewards And Poses Risks. Investment Basics: The Power of Compounding. How Do Americans Invest Their Savings? (HA) How Do Americans Invest Their Savings? (HA) Learning how to save money for future use is an important first step in reaching your long-term goals. But saving alone is not enough. You will also need to

More information

IU Tax Deferred Annuity Plan (51913) IU TDA Plan. Start investing in yourself today, with help from IU TDA Plan and Fidelity.

IU Tax Deferred Annuity Plan (51913) IU TDA Plan. Start investing in yourself today, with help from IU TDA Plan and Fidelity. IU Tax Deferred Annuity Plan (51913) IU TDA Plan Start investing in yourself today, with help from IU TDA Plan and Fidelity. Invest some of what you earn today for what you plan to accomplish tomorrow.

More information

The essentials of investing for retirement.

The essentials of investing for retirement. The essentials of investing for retirement. Fidelity has been helping people invest for retirement for more than 65 years. Some investors use our actively managed and index mutual funds. Some use our powerful

More information

PROFESSIONAL FIXED-INCOME MANAGEMENT

PROFESSIONAL FIXED-INCOME MANAGEMENT MARCH 2014 PROFESSIONAL FIXED-INCOME MANAGEMENT A Strategy for Changing Markets EXECUTIVE SUMMARY The bond market has evolved in the past 30 years and become increasingly complex and volatile. Many investors

More information

Morningstar Highlights

Morningstar Highlights Morningstar Highlights Second quarter Data as of June 30, 2015 Invesco offers funds that have competitive performance relative to their peers across most style boxes. Below are Invesco funds with four-

More information

American Funds Insurance Series. U.S. Government/ AAA-Rated Securities Fund. Summary prospectus Class 3 shares May 1, 2016

American Funds Insurance Series. U.S. Government/ AAA-Rated Securities Fund. Summary prospectus Class 3 shares May 1, 2016 American Funds Insurance Series U.S. Government/ AAA-Rated Securities Fund Summary prospectus Class 3 shares May 1, 2016 Before you invest, you may want to review the fund s prospectus and statement of

More information

Deutsche Floating Rate Fund

Deutsche Floating Rate Fund Taxable Fixed-Income 2 nd quarter 2014 Deutsche Floating Rate Fund Access a world of opportunities through the global resources of Deutsche Bank Canada United States Netherlands Belgium United Kingdom

More information

Nuveen Tactical Market Opportunities Fund

Nuveen Tactical Market Opportunities Fund Nuveen Tactical Market Opportunities Fund Summary Prospectus January 29, 2016 Ticker: Class A NTMAX, Class C NTMCX, Class I FGTYX This summary prospectus is designed to provide investors with key Fund

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

Insurance Dedicated Funds: Variable Insurance Trusts

Insurance Dedicated Funds: Variable Insurance Trusts At a Glance September 2015 Insurance Dedicated Funds: Variable Insurance Trusts Our goal at GSAM is to meet the financial goals of investors worldwide, now and in the future, with innovative investment

More information

Managing cash in your portfolio

Managing cash in your portfolio Managing cash in your portfolio Vanguard research October 2012 Executive summary. Investors may maintain cash in their portfolios for a number of reasons, such as to cover daily living expenses and in

More information

Investing in a Rising Rate Environment

Investing in a Rising Rate Environment Investing in a Rising Rate Environment How Rising Interest Rates Affect Bond Portfolios By Baird s Private Wealth Management Research Summary With historically low interest rates and the unprecedented

More information

Wealth Management Solutions

Wealth Management Solutions Wealth Management Solutions Invest in the Future Life has significant moments. Making sure you re prepared for them is important. But what can you do when the pace of your life leaves you little time to

More information

UNDERSTANDING CLOSED-END FUNDS

UNDERSTANDING CLOSED-END FUNDS Lessons in Investing for Income UNDERSTANDING CLOSED-END FUNDS Income is one of investors most common goals but one not easily achieved, especially in today s low-yielding environment. That s why investors

More information

Investing in Bonds Page 1 INVESTING IN BONDS

Investing in Bonds Page 1 INVESTING IN BONDS Investing in Bonds Page 1 INVESTING IN BONDS WHEN BUYING A BOND, YOU ARE LOANING MONEY TO A BOND ISSUER IN NEED OF CASH TO FINANCE A VENTURE OR FUND A PROGRAM, SUCH AS A CORPORATION OR GOVERNMENT AGENCY.

More information

Structured Products. Designing a modern portfolio

Structured Products. Designing a modern portfolio ab Structured Products Designing a modern portfolio Achieving your personal goals is the driving motivation for how and why you invest. Whether your goal is to grow and preserve wealth, save for your children

More information

WHAT TODAY S BRAVE NEW WORLD IN BONDS MEANS FOR YOU. BY JOE BONNETT, CFP, ChFC BONNETT WEALTH MANAGEMENT. Understanding Bonds

WHAT TODAY S BRAVE NEW WORLD IN BONDS MEANS FOR YOU. BY JOE BONNETT, CFP, ChFC BONNETT WEALTH MANAGEMENT. Understanding Bonds Understanding Bonds WHAT TODAY S BRAVE NEW WORLD IN BONDS MEANS FOR YOU BY JOE BONNETT, CFP, ChFC BONNETT WEALTH MANAGEMENT WHAT TODAY S BRAVE NEW WORLD IN BONDS MEANS FOR YOU The idea is simple: A bond

More information

Determining your investment mix.

Determining your investment mix. Determining your investment mix. Ten minutes from now, you could know your investment mix: And if your goal is to choose investment options that you can be comfortable with, this is an important step.

More information

A GUIDE TO MUTUAL FUND INVESTING

A GUIDE TO MUTUAL FUND INVESTING Many investors turn to mutual funds to meet their long-term financial goals. They offer the benefits of diversification and professional management and are seen as an easy and efficient way to invest.

More information

Taxable Fixed Income. Invesco Floating Rate Fund (AFRAX)

Taxable Fixed Income. Invesco Floating Rate Fund (AFRAX) Taxable Fixed Income Invesco Floating Rate Fund (AFRAX) Senior Secured Loans A unique asset class Floating rate funds, also called senior loan funds, invest in senior secured loans. The loans have very

More information

Economic & Market Outlook

Economic & Market Outlook Monthly Portfolio Commentary December 31, 2015 Economic & Market Outlook Stocks rebounded in 2015 s fourth quarter, but provided little reward for the year as a whole. The S&P 500 Index recovered from

More information