Volatility Survival Kit
Essential expertise to help you stay invested even in the most uncertain markets.
EDUCATIONAL RESOURCES
Demystifying Bonds in a Rising Rate Environment >
Managing Market Expectations >
Penalty for Missing the Market >
PORTFOLIO IN ACTION
PORTFOLIO IN ACTION
Key Strategies to Help Manage Risk in Today’s Volatile Environment
- Taxable Income
- Tax-Exempt Income
- Equities
Taxable fixed income has provided compelling long-term yield.
Today’s investors may need to re-consider their fixed income portfolios to ensure they are built for rising rates.
Annualized Bond Returns
Source: RBC Global Asset Management (2020). This example is hypothetical in nature, does not reflect actual investment results, and is not a guarantee of future results. This is for illustrative purposes only and not indicative of any investment. There are certain limitations inherent in hypothetical portfolios and hypothetical results, particularly that they are based on assumptions and do not reflect trading in actual client accounts and do not reflect the impact that material economic and market factors may have had on an actual account.
Why invest in floating rate loans today?
Manage duration risk by replacing longer-dated credit investments with a floating rate fund..
Munis have provided attractive tax-equivalent yield in a time of rising taxes.
A compelling option for those in high tax brackets and high-tax states.
Municipal bonds have offered higher yields than corporate bonds on an after-tax basis
*Municipal bond interest is exempt from federal income tax and, in many states, interest from municipal bonds issued in an investor’s state of residence is exempt from state income tax.
**Tax-equivalent yield based on 40.80% tax level (37% highest federal tax bracket plus the 3.8% Medicare surcharge). Source: Yield is represented by yield to worst (YTW), as of 1/31/22. YTW is the lowest potential yield that can be received on a bond without the issuer actually defaulting and is calculated by making worst-case scenario assumptions on the issue by calculating the return that would be received if the issuer uses provisions, including prepayments, calls or sinking funds. Representative indexes: Short-Term Corporate Bonds: Bloomberg U.S. Corporate 1-3 Year Index, Short-Term Municipal Bonds: Bloomberg Municipal 1-3 Year Index, Intermediate-Term Corporate Bonds: Bloomberg U.S. Intermediate Corporate Bond Index, Intermediate-Term Municipal Bonds: Bloomberg Municipal 5-10 Year Index, Long-Term Corporate Bonds: Bloomberg U.S. Long Corporate Bond Index, Long-Term Municipal Bonds: Bloomberg Municipal Long 22+ Year Index. Past performance is not indicative of future results. An investment can’t be made in an index.
Hedge for inflation by replacing global equity exposure with global listed infrastructure.
Global listed infrastructure has delivered durable returns with durable growth.
Operating Income Growth Comparison
Source: CBRE Investment Management, as of 12/31/2021. Source: Global infrastructure universe is represented by CBRE Investment Management Infrastructure investable universe, Global Equities: MSCI AWCI Index and U.S. Inflation: U.S. Consumer Price Index data as of 12/31/2021. 2021 is preliminary. This information is subject to change and should not be construed as investment advice. An index is unmanaged and not available for direct investment. For comparison purposes, company operating earnings and the U.S. Consumer Price Index values were rebased to 100 on 12/31/2000. Yields fluctuate and are not guaranteed. Past performance is no guarantee of future results.
Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal, or volatility of returns. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors, and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Clients should consult your tax or legal advisor regarding such matters. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.