With a glut of information from the financial media, many investors have heard the drumbeat of rising interest rates. Market pundits are predicting higher rates due to rising inflation expectations coupled with an economy that is slowly picking up steam. The Federal Reserve has given more credence to the pundits by increasing the Federal Funds Target Rate twice in its past three meetings, causing investors to ask, “Will my bond ladder protect me in a rising rate environment?”
A critical component of your experience with our firm is the formation of a robust investment plan to guide you and us as we build and maintain your portfolio. In this supporting white paper, we discuss our methodology for helping you pursue your goals.
An overview of the AQR Style Premia fund from Kevin Grogan at BAM Advisor Services. Though the fund itself is new, the academic research behind it is not. Mindful Wealth will be using this investment strategy in many client portfolios.
Financial journalists continue to speculate on when the Federal Reserve’s Federal Open Market Committee (FOMC) will increase its target range for the Federal Funds Rate (FFR), the benchmark overnight rate. This speculation has gone on for years, as the U.S. has experienced near-zero short-term rates since the Great Recession. The question often arises: “Interest rates have to increase so shouldn’t the fixed income portion of my portfolio hold short-term bonds?” Owing primarily to the fact that there is not much room for interest rates to further decrease, it does seem likely that interest rates will eventually have to increase. But for a portfolio adjustment to be prudent, an investor must also know when the change will happen and by how much. So what does market data say about future short-term interest rates?