Market Charts

Starting yields and the ability to withstand rate increases

06/17/2019

With duration being equal, a fixed income security with a higher starting yield means that it can withstand more significant increases in interest rates before its total return will be negative.

 

Keep in mind that as interest rates rise, prices for bonds with fixed interest rates may fall. This may have an adverse effect on a fund’s portfolio.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. All these factors can subject the funds to increased loss of principal.

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