rising interest rates
When rates rise, traditional fixed-income investments decline in value. Our solutions have less sensitivity to interest rate movements than investment grade bonds, while seeking a similar volatility profile to that of a diversified bond portfolio.*
With global uncertainty likely to persist, equity market volatility could continue for some time. Our solutions may provide diversification properties to help manage equity market volatility.*
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Foreign currency can have a meaningful positive or negative effect on a portfolio's performance, depending on the movement of the local currency vs. the U.S. dollar. Given the unpredictability of currency movements, our 50% hedged solutions may offer a prudent approach to managing currency risk.*
IndexIQ Currency Corner
- The U.S. dollar continued its downward trend, hitting its lowest level against a basket of currencies since the presidential election, before bouncing back slightly. Most of the dollar's weakness has been a result of escalating U.S. political concerns, following reports on links between Trump's campaign and Russia. The yen, in particular, gained ground against the dollar over these concerns.
- The euro continued to benefit from a reduction in political uncertainty, which had previously weighed on the currency.
- While negative Trump news has certainly weighed on the U.S. dollar, recent employment data and hawkish comments from the Federal Reserve have also provided support to the buck. Arguably, the extent to which political news can weigh on the dollar is limited, but the level and timing of a switch in sentiment are very difficult to predict.
Currency Movements Are Difficult to Predict1
Generating income in a low interest rate environment has been challenging for investors. With rates expected to rise, there are additional concerns to consider when seeking income strategies. Our solution may provide a diversified source of income, with the potential for capital appreciation.*
Given the significant volatility in oil prices and natural resources, investors may want to consider positioning for a potential rebound. Commodities have historically been cyclical in nature and our solutions have the potential to provide investors with unique alpha-generating opportunities.*
smarter core with ETFs
Have you reviewed your core portfolio allocations recently? Our solutions take an innovative and smart approach to traditional core investments for fixed-income and global asset allocations. They’re designed to help you build a smarter core in a transparent, tax-efficient, and
*There can be no guarantee that strategies will be successful or investment objectives will be met. Diversification cannot assure a profit or protect against loss in a declining market.
Alpha - A measure of performance on a risk-adjusted basis.
Commodities - A basic good used in commerce that is interchangeable with other commodities of the same type.
AGGE and AGGP - The value of the Funds’ investment in ETPs is based on stock market prices and the Funds could lose money due to stock market developments, the failure of an active trading market to develop, or exchange trading halts or de-listings.
As with all investments, there are certain risks of investing in the Funds. The Funds’ shares will change in value and you could lose money by investing in the Funds. The Funds’ investment performance, because they are fund of funds, depends on the investment performance of the ETPs in which they invest.
Funds that invest in bonds are subject to interest rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk which is the possibility that the bond issuer may fail to pay interest and principal in a timely manner.
The principal risk of mortgage-backed securities is that the underlying debt may be prepaid ahead of schedule if interest rates fall, thereby reducing the value of the Funds’ investment. If interest rates rise, less of the debt may be prepaid and the Funds may lose money.
1. Source: Bloomberg, 4/4/17-5/23/17. EUR/USD Spot Exchange Rate where the price of 1 EURO is in USD. The calculation is the one week percentage change in spot exchange rate where a negative value is the depreciation of the Euro. JPY/USD Spot Exchange Rate - price of 1 JPY in USD. The calculation is the one week percentage change in spot exchange rate where a negative value is the depreciation of the JPY. The U.S. Dollar Index (USDX) indicates the general international value of the USD. The USDX does this by averaging the exchange rates between the USD and major world currencies. A negative value indicates a general depreciation of the dollar.