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Portfolio Construction Insights

A Fixed Income Balancing Act

Executive Summary

As advisors positioned their portfolios for a low-growth environment and prepared for rising U.S. interest rates, many increased allocations to fixed income plus sector investments. At the same time, these allocations may have introduced unintended investment risks to client portfolios. Find out how to strike the optimal balance between income and stability in your client’s fixed income allocation with our first insight:

Highlights:

  • Advisors may be unaware… Increased exposure to plus sectors of fixed income transformed the risk profile of advisors’ model portfolios
  • … of a changing risk profile… This meant more yield and income opportunities but at a price.
  • … and higher equity correlation. Greater equity-type risk.
     

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This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of November 2017 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Investors will need to consider their own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance cannot guarantee future results. All investments involve risk. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., Distributor.

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