FPA Webinar – The Interest Rate Freight Train

FPA Webinar – The Interest Rate Freight Train

Presented By: Stephen J. Huxley, PHD and Brent Burns

When: September 4th at 2pm EDT
1 CFP® CE Credit

About the Webinar:
Bonds and bond funds are not the same. As evidenced by the small rise in interest rates in May and June of 2013, the current interest rate environment exposes your clients’ bond fund holdings to significant risks. Learn how individual bonds can protect principal and generate predictable income even when rates rise. Register Now

Asset Dedication’s Reaction to the Belief that Fears over Rising Rates are Overblown

Asset Dedication’s Reaction to the Belief that Fears over Rising Rates are Overblown

In this letter to the editor of Advisor Perspectives, Asset Dedication’s Stephen J. Huxley, PHD responds to Joe Tomlinson’s article, Retirement Portfolios: Fears over Rising Rates are Overblown. In Steve’s response, he discusses some the weaknesses of the underlying assumptions Joe Tomlinson uses when talking about bond funds in rising interest rate environments. Click here to read the letter >>>

Interest Rate Freight Train

Interest Rate Freight Train

In May of 2013, a small rise in interest rates highlighted the risk that bond fund investors face in their “safe” investments.  The relationship between interest rates and market risk is clear.  The mathematical relationship is straight forward.  When interest rates rise, the value of bonds goes down.  For bond funds, rising rates means that total return has to fight the headwind of losses on the underlying portfolio.  As NAV declines, coupon interest generated by the bonds in the portfolio may or may not be enough to overcome the price loss.  On the other hand, making the same fixed income allocation to high quality individual bonds and holding them to maturity is a clearly superior strategy when rates rise because it can protect principal and avoid losses in a way that bond funds cannot. Download the white paper  >>>