RATES IN FOCUS: WHAT TO DO NOW

With US inflation on the rise, should investors be concerned?

What our managers think about
inflation and interest rate expectations

Western Asset

Fed's Base Case for Taper Takes Shape, For Better or Worse

“...policy inertia tends to limit the Fed’s flexibility in the last few months before the action is expected.”

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Market Commentary

“Our view is that markets are recalibrating to a future that may appear much different than the present.”

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Franklin Templeton Fixed Income

On My Mind: Leaving QE, Never Easy

“Investors should be prepared for increased volatility as the markets try to interpret and anticipate the likely changes in policy regime.”

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Franklin Templeton Investment Solutions

An Uneasy Truce

“On balance, we remain optimistic that ample stimulus will continue to be provided and that a dovish bias to policy persists.”

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More Thoughts From Our Managers

Fine-tuning fixed income:
strategies that can help now

Uncertainty about inflation and yields in the bond market creates both opportunities and challenges. Some strategies are designed for all seasons, to help manage through the uncertainty, for example: Western Asset Core Bond Fund and Western Asset Core Plus Bond Fund. You might also have more specific goals for fixed income holdings in a client’s portfolio such as income generation, ballast or diversification.

income generation

INCOME GENERATION
Choices to generate meaningful income in today’s low-rate environment


Franklin Municipal Bond Strategies

  • Comprehensive suite of tax-free income focused portfolios
  • Emphasis on risk management

BrandywineGLOBAL – Corporate Credit Fund

  • Seeks high current income consistent with capital preservation
  • Invests in high yield and investment grade corporate bonds

BrandywineGLOBAL – High Yield Fund

  • Seeks high current income and capital appreciation
  • Value-oriented approach to high yield corporate bond market

Beyond Fixed Income

Franklin Income Fund

  • Flexible value-oriented strategy mixing stocks and fixed income
  • Seeks to maximize income with potential capital appreciation

Clarion Partners Real Estate Income Fund (CPREIF)1

  • Direct access to institutional-quality private real estate
  • Seeks current income and long-term capital appreciation
ballast

BALLAST
Choices to help limit the potential impact of higher rates this year


Western Asset Short-Term Bond Fund

  • Focused on investment grade securities with average effective maturity of 3 years or less
  • Seeks current income with capital preservation and liquidity

Western Asset Ultra-Short Income Fund

  • Short-term investment grade debt portfolio with duration of 1 year or less
  • Seeks current income with capital preservation and liquidity

Franklin Liberty Short Duration U.S. Government ETF (FTSD)

  • 80% of assets in securities issued or guaranteed by U.S. or its agencies
  • Seeks high current income as well as capital preservation
diversification

DIVERSIFICATION
Choices to help balance the portfolio risks of traditional fixed income


BrandywineGLOBAL-Flexible Bond Fund

  • Nimble global bond strategy that adapts to market conditions
  • Seeks income and capital appreciation

Beyond Fixed Income

Franklin K2 Alternative Strategies Fund

  • Allocations to multiple alternative strategies and managers
  • Seeks capital appreciation with less volatility than broad equity markets
core fixed income

CORE FIXED INCOME
Strategies offering a solid foundation of investment-grade fixed income to help anchor diversified portfolios


Western Asset Core Bond Fund

  • Seeks to maximize total return from high-quality, U.S. dollar-denominated fixed income
  • Supported by Western Asset’s value-oriented philosophy, drawing on both macro and fundamental insights

Western Asset Core Plus Bond Fund

  • Actively managed core bond strategy with limited exposure to opportunistic debt sectors
  • Seeks to maximize total return with broad diversification among key investment themes

CONTACT US TO
STRESS TEST YOUR PORTFOLIO

Our Portfolio Consulting Services team can conduct a customized stress test on your portfolios to gauge the impact of different interest rate scenarios. Call 1-800-DIAL-BEN to get the process started or fill out the form below to request a sample report.




Your consultation will include:

  • Historical stress test comparisons
  • Equity and macro scenario stress tests
  • Fixed income scenario stress tests
  • Portfolio asset correlations

Financial Professionals Only