Looking at the state of the fixed-income markets lately, it is apparent many participants have gone from blindly trusting that the Federal Reserve will hold interest rates low, to second-guessing just how hawkish the Fed could get before year’s end.
Although the transparency of the Fed’s intentions has been unprecedented, that hasn’t exactly been a good thing for bond investors. As a stronger-than-expected labor market continues to gain momentum, institutions and individuals have been spooked out of their fixed-income positions over fears that the taper timetable could imminently be moved forward.
So, if you depend on a reliable income stream from your portfolio, how should you navigate the remainder of 2013? In my opinion, now is the time to follow all investments very closely, and not simply buy-and-hold your way through what could be a very serious storm in both the equity and fixed-income markets.
On a percentage basis since the most recent low, the rise in interest rates has been awe-inspiring. Although we could very well be nearing a point of stabilization in the very near-term, I think it’s prudent to put forth solid investment options that could serve as a life raft in the event we are just in the eye of the hurricane.
A few funds that I find appealing if we continue to see volatility in interest rates include: