The Federal Reserve has tightened its monetary policy as it gradually hikes interest rates to head off a potentially overheating economy. While rising rates can weigh on fixed-income portfolios, bond investors may look to interest rate-hedged exchange traded fund strategies to generate the same level of yields they are accustomed to and limit rate risk.
“Fixed income has a much more direct correlation to what’s happening with respect to rates, and really 2018 has been a difficult environment for fixed-income investors,” Kieran Kirwan, Senior Investment Strategist for ProShares, said at the Charles Schwab IMPACT 2018 conference.
Fixed-income investors who are looking for strategies in a rising rate environment could look at specialized strategies designed for hedging against rising rates.