Rising Interest Rates: Finally some Informed Insights!

Rising Interest Rates: Finally some Informed Insights!

October 18, 2013 Uncategorized
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(Last Updated On: October 17, 2013)

Paul Milnes and his team at Outsourced Financial Analytics has some thought-provoking commentary on bonds.

He is running a 3 part series and the first 2/3 are complete:

Part 1: http://ofanalytics.wordpress.com/2013/09/16/on-rising-interest-rates/

Last weekend, a former colleague asked whether investing in fixed income carries the risk of principal loss. Though my immediate answer was a no, I felt the need to provide a more comprehensive answer. Over the course of a two part series, I will focus on the impact monetary policy has had on interest rates and discuss the interest rate outlook in the context of the current implied forward yield curves. In part two, I will consider these implications on fixed income investing and discuss some ideas on how to structure the fixed income portion of your portfolio.

Part 2: http://ofanalytics.wordpress.com/2013/10/15/on-rising-rates-fixed-income-investing/

In this post, we will discuss the effects of rising interest rates on fixed income instruments. We will focus on the technical mechanics of the yield curve along with economic fundamentals and monetary policy. We think it is important to understand this particular aspect of fixed income investing. Importantly, we do not focus on credit risk during this series of posts. In the final post of this series, we will share our thoughts on how best to structure a fixed income portfolio in such an environment, especially from a multi-manager (as opposed to individual bond) point of view.

Very interesting…


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About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.