FMD Capital Management

Posts Tagged: rising rates

Comparing Bond ETFs: Same Yield, Less Interest Rate Risk

Written by David Fabian, January 16th, 2018

The two biggest risks that bond investors face are rising inflation and rising interest rates. This dual threat has been moderated for many years now as global central banks set accommodative policies to boost asset prices. The ultimate result of which has been tame inflationary metrics, steady jobs growth, corporate earnings expansion, and firm declines in Treasury yields.

The more recent roundabout (or tightening) of Federal Reserve fiscal policy has created a unique environment for bond investors to evaluate. Namely a flattening yield curve, whereby the 2-year U.S. Treasury Yield is sharply rising compared to its 10-year and 30-year counterparts.

Read the complete article at NASDAQ.com

What You Need To Know About Rising Rate Equity ETFs

Written by David Fabian, August 08th, 2017

The concept of rising interest rates is one that investors have been worried about for many years. While we have yet to experience an extended period of rising Treasury bond yields in the last several decades, that hasn’t tampered fears of how such an event would unfold and to what magnitude.

Interest rates, like stocks or commodities, go through cycles of rising and falling trends that can have a pronounced impact on your portfolio returns. Fixed-income assets experience the highest level of inverse correlation with interest rates. However, there is also an undeniable impact on certain stock market sectors as well.

Read the complete article at NASDAQ.com

My Favorite ETFs Have Nothing To Do With Trump

Written by David Fabian, April 29th, 2017

The first 100 days of Donald Trump’s presidency has been good for the stock market.  Whether you agree with his policies or not, there is optimism for the future of the global economy that is being reflected in the recent price action.

Now, of course, that doesn’t mean we are going to see a straight path of gains for the next four years.  There are going to be a myriad of stumbling blocks, uncertainty, and possibly even a bear market that will creep up when we least expect it.  Those declines will be opportunities for those who are ready to take advantage with cash on the sidelines and a well-tuned watch list of solid funds to buy. Read more

Second Quarter Outlook: Trends, Risks, and Opportunities

Written by David Fabian, March 30th, 2017

Forecasting the direction of the markets on a quarter by quarter basis is no easy feat.  There are simply too many unknowns to determine exactly what will happen and how investors will react to future events on both a micro and macro level.  Nevertheless, a look back at recent price action and examining seasonal trends can be helpful to frame expectations.  It may also elevate the need for closer examination of your existing holdings and offer consideration for changes to reduce risk or capitalize on fresh opportunities. Read more

Preferred Stock ETFs Face New Test

Written by David Fabian, March 13th, 2017

Preferred stocks offer the distinction of being unique hybrid instruments with qualities of both stocks and bonds.  In that manner, they offer healthy dividend yields alongside a favored position in the capital structure of many companies that issue these securities.

The reason company’s issue preferred shares are to raise capital from investors that are seeking an attractive yield without adding traditional debt (bonds) that carry strict maturity dates and covenants.  Preferred stocks can also be “callable” from the issuer, who has the right to redeem them at a certain price or time at their discretion.   Read more