Investment risks, such as changing interest rates, may present opportunities for fixed-income solutions. Consider a non-traditional approach for navigating interest rates with Columbia Threadneedle Investments.
Predicting how and when interest rates will change can frustrate investors and leave advisors uncertain on a strategy. Instead of viewing fluctuations as an obstacle to your clients’ goals, consider them an opportunity. We’ve created a non-traditional strategy to endure changing rates and thrive in all markets — helping you navigate today's fluctuating market and guide your clients toward success.
Four major risk factors
Duration, credit, inflation and currency risk are all drivers of fixed-income performance, and they affect investments differently. We believe that a multi-sector approach that capitalizes on all four risk factors may lead to better or more diversified outcomes across market cycles. In each case below, one of the four risk factors dominates the overall risk profile, which subjects investors to a narrow range of potential outcomes.
For a closer look at when these risks are most and least attractive, read our white paper, Harnessing Fixed-Income Returns Through the Cycle.
How different risks drive performance of common bond indices Source: BlackRock Solutions, 12/31/15
A traditional fixed-income portfolio, which typically invests in high-quality, government-related bonds, can leave investors vulnerable to the performance of one single risk factor — duration. Also known as interest rate risk, duration represents the price volatility of a long-term investment in a changing interest rate environment. The longer you hold an investment, the more impact interest rate changes will likely have on returns.