Stable Value in 2018: Using the Full Tool Box to Navigate Rising Rates

Research

06/29/2018

Karen Chong-Wulff, CFA®, CAIA

Managing Vice President, Fixed Income

Xin Zhou, CFA, FRM

Director, Senior Fund Manager

After a 30-plus-year bull market fueled by declining rates, fixed income portfolio managers are facing the challenge of managing fixed income portfolios in a rising interest rate environment. For some context, in April 2018, the 10-year Treasury rate broke above 3 percent for the first time since early 2014, and it was 2011 when the 10-year rate last stayed above 3 percent for a sustained period. Portfolio managers enjoyed a prolonged bull market that was coupled with lower return expectations as rates moved lower. That may have encouraged some to take on undue risk, and now that interest rates are increasing, those risks become more significant.

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