Health & Fitness
Examining Risk of Fixed Income Returns
Investors should consider the way they think about fixed income investing and broaden their vision.
72 Basis Points: Increase in interest rates it would take to eliminate the total return for the 5-10 year credit component index of the Barclays US Aggregate Index
It's a very complex and different fixed income world than it was just 5 or 6 years ago. Conventional fixed income investments are offering historically low yields, a new risk for investors to consider. It would take very little in the way of a rate increase for investors to lose their total returns across many traditional fixed income sectors. For example, look at the 5-10 year credit component index of the Barclays US Aggregate Index. It would only take a 72 basis point increase in interest rates to eliminate the total return of that index. Similarly, agency mortgage-backed securities could withstand only a 36 basis point rise in rates before the sector total return is eroded to zero. Investors should consider the way they think about fixed income investing and broaden their vision.
Source: BlackRock, October 2012
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Prepared by BlackRock
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Delivered courtesy Joel W. Grams, CRPC®, CLTC,
Registered Representative, Financial Planner, 212 Capital Group
38 Main Street Suite 360, Westlake Ohio 44145
(440) 835-4501 Ext 17, jgrams@212capitalgroup.com
The foregoing discussion is general in nature and not intended as specific advice.
New England Financial nor its representatives are engaged in rendering tax,
accounting or legal advice. A qualified professional should be consulted regarding the effect of such considerations on the matters covered in this publication.
For information on New England Financial insurance or other financial products and services, please contact Joel W. Grams, CRPC®, CLTC, Registered Representative, Financial Planner with /New England Financial 38 Main Street Suite 360, Westlake, OH 44145, at (440) 835-4501 ext. 17, jgrams@212capitalgroup.com
New England Financial is the registered mark for New England Life Insurance Company (NELICO) Boston, MA 02116. Securities and investment advisory services offered through New England Securities, Corp. (NES)(member FINRA/SIPC) a Registered Investment Advisor. NELICO and NES are MetLife companies.L1212297000[exp0414][OH]