April 13, 2011 13:58 ET

White Paper From Rydex|SGI Suggests Potential Fixed-Income "Risk Surprise"

Long-Only Bond Portfolios May Not Be the "Safe Haven" That Investors Expect According to Rydex|SGI Fund Portfolio Manager

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,

Investing in alternative investments is not suitable for all investors and involves special risks such as risk associated with short sales, leveraging the investment, potential adverse market forces, regulatory changes, and potential illiquidity. Investing in alternative strategies presents the opportunity for significant losses. There is no assurance that the investment objective will be attained.

The opinions and forecasts expressed are those of Kirk Barneby, portfolio manager at American Independence Financial Services, as of 12/6/2010, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy. American Independence Financial Services ("AIFS") serves as sub-advisor to Rydex|SGI Long Short Interest Rate Strategy Fund and is not affiliated with Rydex|SGI or Rydex Distributors, LLC ("Rydex|SGI"). However, Rydex|SGI has business relationships with AIFS.

Read the fund's prospectus and summary prospectus (if available) carefully before investing. It contains the fund's investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at www.rydex-sgi.comor call 800.820.0888.

Rydex|SGI funds are distributed by Rydex Distributors, LLC (RDL). Security Investors, LLC (SI) is a registered investment advisor, and does business as Security Global InvestorsSM and Rydex Investments. SI and RDL are affiliates and are subsidiaries of Security Benefit Corporation, which is wholly owned by Guggenheim SBC Holdings, LLC, a special purpose entity managed by an affiliate of Guggenheim Partners, LLC, a diversified financial services firm with more than $100 billion in assets under supervision.

About Rydex|SGI
Rydex|SGI manages approximately $25 billion in assets. The firm offers institutional investors and financial intermediaries a broad spectrum of traditional and non-traditional investment options that span four distinct disciplines: fundamental alpha (actively managed equity and fixed-income), alternative strategies, target beta strategies, and ETFs. For more information call 800-820-0888.

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