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CIP Quips

Benefits of a Rising Interest Rate

Did you know…

The noise surrounding the impending interest rate hike tends to send quivers through the average investor’s boots.  While the details remain uncertain, let’s take a moment to point out some of the positive implications that may come along with an interest rate hike.

  • Higher Returns on Interest Income
    Rising interest rates would benefit the investors whose savings have experienced years of depressed interest rates.  Higher returns paid on their savings could help cover increasing living expenses, and over time investors appreciate modest increases in interest income.
  • Loosening up of Credit & Boosting Economic Growth
    Credit remains tight in most sectors.  When interest rates increase financial institutions may be willing to part with money more freely and the incentive to loan out at higher rates could boost economic growth.
  • Fundamentals Matter Again
    Normalization of interest rates should bring equity market fundamentals back into focus and remove the “easy money” concept that years of monetary policy have caused.
  • Inflation In-Check
    The Fed has set a target core inflation rate of 2%, and throughout the year inflation has been steadily moving towards that target. Inflation at this targeted level may encourage economic growth as consumers who anticipate price increases may buy more to avoid price hikes, helping generate a healthy economy.
  • Stimulating the Housing Market
    The prospect of higher interest rates could motivate potential homebuyers to purchase.
  • Roosevelt’s Current Income Portfolios’ Current Yield would start to rise.

Source: Bloomberg as of 11/29/16


What are we thinking?

Why play the guess when the interest rate increases game? We all know the disadvantages and pitfalls of trying to time the market. 

With a goal of a creating a well-diversified, conservative portfolio with a consistent stream of enhanced income, our Current Income Portfolio is built to take advantage of a low interest rate environment as well as a rising rate environment.  About 30% of our corporate bond allocation is due to mature in 1-3 years, which may enable reinvestment at higher rates when they appear and we use fixed to floating rate and pure floating rate preferred securities, which provide coupon payments that will increase in line with rates.  



This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.

Past performance is not a guarantee of future results. Indices are unmanaged and cannot accommodate direct investment. Themes assigned as per Roosevelt Investments’ evaluation. Risk tools may include cash or other securities that we believe possess a low or inverse correlation to the overall market.


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The Roosevelt Investment Group, Inc. is an independent investment management firm that is not affiliated with any parent organization. The Roosevelt Investment Group, Inc. manages equity, fixed income, and balanced assets for primarily U.S. clients. The Roosevelt Investment Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission and notice filed in all 50 states.

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