As the Federal Reserve continues to tighten its monetary policy, fixed-income investors will have to adapt their portfolios to the changing interest rate environment.
On the upcoming webcast Wednesday, July 25, Fixed Income As Rates Rise, Matthew Bartolini, Head of SPDR Americas Research for State Street Global Advisors, Rob Glownia, Fixed Income Portfolio Manager at Riverfront Investment Group, and Robert D. Williams, Principal and Managing Director at Sage Advisory Services, will look to opportunities in the short-end of the yield curve to generate income while mitigating duration risk and consider ways to blend active and passive exposures to help financial advisors position portfolios in today’s bond market.
Fixed-income investors can look to something like the like the SPDR Barclays Investment Grade Floating Rate (NYSEArca: FLRN) to hedge interest rate risks. The ETF follows the Bloomberg Barclays U.S. Dollar Floating Rate Note < 5 Years Index, which seeks to provide exposure to debt instruments that pay a variable coupon rate, a majority of which are based on the 3-month LIBOR, with a fixed spread.
Floating rate notes, like the name suggests, have a floating interest rate. Specifically, the notes’ have a so-called reset period with interest rates tied to a benchmark, such as the Fed funds, LIBOR, prime rate or U.S. Treasury bill rate. Due to their short reset periods, these floating rate funds have relatively low rate risk.