Zacks Podcast Highlights: Higher Interest Rates Are Coming, How Do Investors Prepare?

Interest rates are on the rise and this could be a rough period for bond investors. If you are concerned about how to prepare your portfolio in this environment, make sure to listen to this podcast. In this edition of the Dutram Report, Eric Dutram talks with Bryce Doty of Minneapolis-based SIT Funds to find out what is in store in the months ahead. Bryce discusses some strategies for investors in this difficult time, as well as key issues that need to be your focus in order to hedge your bets in this rising rate world. 

In this edition of the Dutram Report, we take a closer look at the fixed income market and the looming storm clouds on the horizon for investors.

With interest rates finally starting to rise, bond investors are beginning to feel the pain. Investors in broad bond market products like the iShares Core US Aggregate Bond ETF (AGG), the Vanguard Intermediate-Term Bond ETF (BIV), and the iShares 7-10 Year Treasury Bond ETF (IEF) are all seeing red over the past month, with the prospect of more losses on the horizon if the Fed raises rates this year.

What is an investor to do in this environment?

To listen to the podcast, click here or above: ( )

For a great discussion of what investors can do, we managed to speak with Bryce Doty of Minneapolis-based SIT Funds for some insights. Bryce is a senior portfolio manager at the firm, overseeing roughly $7 billion in fixed income investments, so he definitely knows a thing or two about the bond world.

In our discussion, Bryce talks about his outlook for the Fed, possible changes to interest rates in the near term, and his expectations for how this will impact bond investors. Bryce also talks about the likelihood of a bond bull market being over and what that might mean to us to close out 2016.

Additionally, Bryce talks about his company’s Sit Rising Rate ETF (RISE) and how this product can be used to hedge investors’ risks in the bond world, as well as the strategies that the product uses to accomplish this task. Much of this discussion centers on the product’s target of a negative 10-year duration bond portfolio, and how this can be used to balance out what is likely to be a poor return for unhedged fixed income investors should the Fed follow through and hike rates to close out 2016.


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