Consider the Source: Fixed-Income Alternatives

Over the past three to four decades, we have been experiencing a declining interest rate environment. Due to the inverse relationship between interest rates and bond prices, this has caused bonds to be worth a little more each day, making bonds a source of stability in portfolios in a rising interest rate environment. However, this all goes out the window once interest rates begin to rise.

So, what can investors do as we prepare to cycle into a rising interest rate environment? In the first episode of his new “Consider the Source” video series, Omnia Family Wealth Co-Founder and Chief Operating Officer Michael Wagner offers some investment options for your portfolio that, regardless of interest rates and volatility, can act as a source of stability.

Two specific examples Wagner mentions that can protect portfolios in a rising interest rate environment include:

  • A sleeve of high quality, low beta hedge funds
  • Senior-secured loans to performing real estate that pay a floating rate

During the video, Wagner emphasizes the importance of having a stable source, other than bonds, of income in your portfolio. Investors are entering into a rising rate environment and investors need to get creative about the players in their portfolio and the roles they are playing.

As always, please do not hesitate to contact us with any questions. We are available via email or phone at (305) 602-9080.

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