Money market accounts are yielding close to zero, deposits are also yielding next to nothing and the Federal Reserve has made it clear that it intends to keep interest rates low until at least the middle of 2013. In this low rate environment, investors are searching for fixed income products to add to their portfolios that can generate higher yield.
But in this video Steve Laipply, a member of BlackRock’s Model-Based Fixed Income Portfolio Management Group, cautions that there’s no such thing as free yield. Often, products that generate higher returns also involve greater risks.
Steve outlines three basic risks that are associated with fixed income investments — interest rate risk, credit risk and volatility risk — and explains how investors need to determine which level of risk they are comfortable with before making any buying decisions.
Duration : 0:6:50
