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A framework for making interest rate bets
February 2011
Many plan sponsors now believe we are entering a rising interest rate environment. This may cause them to delay extending the duration of their fixed income portfolios or to wind back liability-matched long-duration positions. Calling the future path of interest rates is notoriously difficult and should be undertaken only with due caution. This research explains how in the face of a widespread view that the balance of probabilities points to an increase in rates, Russell has established a framework that enables plans to act on this view if they so choose, while scaling this bet at an appropriate level and retaining a plan to get back to a neutral position.
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For more information about our research, please contact David or Gerry:
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Date of first use: February 2011
USI-8992
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