FMD Capital Management

Controlling Your Duration with Innovative ETFs

Written by Michael Fabian, September 11th, 2013

The volatility in interest rates this year has been particularly troublesome for  fixed-income investors. Much of the jump in long-term Treasury bond yields has  been due to the quicker than expected improvement in the labor market, thereby  putting pressure on the Federal Reserve to begin tapering its asset purchase  programs in 2013. The unrelenting rise in stock prices combined with investors  pouring assets into equity-oriented funds at a breakneck pace has also put  downward pressure on the fixed-income sentiment.  This has been a wakeup  call for investors to begin paying closer attention to their fixed income  holdings, and examine them for potential weaknesses.  Investors that own  traditional “core” fixed income funds now face a unique set of challenges:  continue to hang on as rates creep higher and indexes ultimately rotate to  higher yielding bonds, or sell and forego the cash-flow benefit of fixed income  altogether?

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