NEW YORK, NY--(Marketwire - Apr 13, 2011) - Rydex|SGI, the asset management industry's leading provider of innovative ETF and Alternative Investments solutions, has released a white paper on the current bond market describing how investors can prepare for a fixed-income "risk surprise."
Authored by Kirk Barneby, portfolio manager for the Rydex|SGI Long Short Interest Rate Strategy Fund, the report -- Interest Rates Are Changing: What Do Fixed-income Investors Do Now? -- identifies potentially serious interest rate and credit risks that could affect all segments of the bond market. The paper also describes in detail how active duration may help manage risk with the use of Treasury derivatives.
"Now that the worst of the economic crisis seems to have passed, investors appear to be disregarding recent history and piling into bonds as some kind of safe haven," said Mr. Barneby. "There is, however, no 'risk-free' or even 'low-risk' scenario on the horizon for most fixed-income assets. We're concerned that's a future for which many fixed-income investors are simply not prepared."
The Rydex|SGI report, the latest addition to a body of thought pieces produced by the firm's investment team, includes sections on:
- Why investors are fleeing to "safety,"
- The potential risk surprise for bond investors, and
- An alternative approach to risk management
"Actively managing duration, including the ability to go to a negative duration, may well be a powerful tool in managing interest rate risk going forward," says Mr. Barneby.
All Rydex|SGI reports can be accessed on the company's financial professional website,