Interest rates were bound to rise from their mid-2012 low of 1.5% on the 10-year bond. But the intensity of the increase that began last May, when the rate shot up from 1.7% to 3% in less than seven months, took most investors and financial advisors by surprise. This years tame first quarter provided breathing room to reconsider fixed income portfolios, especially in light of new products designed to help meet the current challenge: Managing the safe portion of a balanced portfolio to provide a yield that doesnt lag inflation and leaves firepower to buy if interest rates do rise.
Right now, you have a choice between zero return in cash or current income with principal risk in traditional high-grade fixed income securities, says Steve Baker, president of Investors Capital Management in Darien, Conn.
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