We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
iShares 7-10 Year Treasury Bond ETF (IEF) - $25 value - yours FREE >>
iShares Core U.S. Aggregate Bond ETF (AGG) - $25 value - yours FREE >>
Vanguard Intermediate-Term Bond ETF (BIV) - $25 value - yours FREE >>
Image: Bigstock
Higher Interest Rates Are Coming, How Do Investors Prepare?
With interest rates finally starting to rise, bond investors are starting to feel the pain. Investors in broad bond market products like the iShares Core US Aggregate Bond ETF (AGG - Free Report) , the Vanguard Intermediate-Term Bond ETF (BIV - Free Report) , and the iShares 7-10 Year Treasury Bond ETF (IEF - Free Report) are all seeing red over the past month, with the prospect of more losses on the horizon if the Fed raises rates this year.
What is an investor to do in this environment?
Fortunately, for this edition of the Dutram Report, I managed to speak with Bryce Doty of Minneapolis-based SIT Funds for some insights. Bryce is a senior portfolio manager at the firm, overseeing roughly $7 billion in fixed income investments, so he definitely knows a thing or two about the bond world.
In our discussion, Bryce talks about his outlook for the Fed, possible changes to interest rates in the near term, and his expectations for how this will impact bond investors. Bryce also talks about the likelihood of a bond bull market being over and what that might mean to us to close out 2016.
Additionally, Bryce talks about his company’s Sit Rising Rate ETF and how this product can be used to hedge investors’ risks in the bond world, as well as the strategies that the product uses to accomplish this task. Much of this discussion centers on the product’s target of a negative 10-year duration bond portfolio, and how this can be used to balance out what is likely to be a poor return for unhedged fixed income investors should the Fed follow through and hike rates to close out 2016.
You should also feel free to check out their site for a great interest rate defense calculator which can show you what the impact of higher rates will be on your fixed income instruments, as well as the current duration of your bond portfolio. And for more insights from Bryce and a broader discussion of the bond world, make sure to listen to this edition of the Dutram Report!
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>