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Rates & Retirement – A Power Struggle

What's in the News:

In a recent NASDAQ article, a 59 year old man preparing for retirement remarked, “It's absolutely ridiculous how hard it is to generate income”. While we all continue to wait for higher interest rates, baby boomers and older retirees are thirsting for yield after spending roughly a decade waiting for a meaningful increase.  Desperation for income translated into strong demand for higher yielding bonds last year, with bond mutual funds taking in $201.9 billion in net new money over the first nine months of 2017. 

This year, the Federal Reserve officially projects three rate hikes.  However, there seemed to be disagreement at the Fed’s December meeting as to whether these three projected hikes will become reality. Rate hike schedule aside, other variables such as US tax legislation, tight credit spreads, a flat yield curve, trimming of the Fed’s balance sheet, and an uncertain geopolitical environment need to be monitored as boomers look to generate high income in a risky environment.

Rate Hike Projections for 2018

Source: Bloomberg 1/8/17


What are we thinking?

All signs point to 2018 being an eventful year, but when those events will take place is uncertain. While rates will rise eventually, we believe that attempting to forecast when is a futile exercise. 

Designed to provide high income without taking excessive risk in a low rate environment, as well as benefit from a rising rate environment, our Current Income Portfolio is a suitable solution for investors seeking a risk conscious approach to income generation. As active managers, we seek to provide value by remaining cognizant of current trends, making reasonable and informed expectations of Fed announcements, paying attention to credit spreads, and diversifying in preparation for interest rates to trend higher. 



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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