With a choppy market environment leading into 2016 after the December rate hike, a question remains regarding what the Fed has in store next. “Even if rates aren’t expected to rise very much, there’s still a lot of uncertainty about what will happen,” said our CIO Steve Wruble in a January 7th U.S. News article, “How to Fed-Proof Your Portfolio.”1 With no guarantee about rates, Steve believes now is a good time for a portfolio review. A first step is to consider what downside risk mitigation strategies are appropriate for investors’ income expectations and time horizons in light of what they want their portfolio to accomplish. One option Steve thinks can be key to a core portfolio is a diversified mix of strategies, especially when it comes to income. Another approach on Steve’s radar is Treasury Inflation Protected Securities (TIPS). If the uptick in the Consumer Price Index (CPI) continues, he believes an allocation to TIPS may become viable. Whatever this rising interest rates environment has in store for 2016, considering the risk tolerance of individual investors remains paramount to choosing portfolio strategies.
1 For the complete article, please visit U.S. News Investing: How to Fed Proof Your Portfolio.
TIPS – Treasury Inflation-Protected Securities (TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index (CPI), the commonly used measure of inflation.
CPI – Consumer Price Index (CPI) is a measure used to assess price changes associated with the cost of living. The return of Treasury Inflation Protected Securities is linked to the rate of U.S. Inflation as measured by the CPI.
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