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Gearing up for a steeper climb

Oct 14, 2026|iShares Fixed Income Product Strategy

In October’s Asia FIX, we present the rising rate toolkit to navigate a potentially turbulent rate environment ahead.

Following a broad selloff across fixed income markets and a major repricing of the monetary policy path in September, investors are once again confronting the possibility that rates may remain higher than previously anticipated. This month, we present the rising rate toolkit - for those who wish to revisit the tools available to navigate a potentially turbulent rate environment ahead.

Given that yields have become relatively more competitive following the broad rise in rates, income can now provide a more meaningful cushion against further price volatility. At the same time, investors can also leverage the granularity of the ETF toolkit to be more precise in managing risk in a rising rate environment, including through short duration and interest rate hedged exposures that can reduce interest rate sensitivity, and floating rate exposures that can benefit should reference rates reset higher.

Rising Rate Toolkit

  • Short duration bond ETFs: With short maturities, short duration ETFs can reinvest at prevailing rates while keeping rate sensitivity low.
  • Interest rate hedged ETFs: Rate hedging minimizes duration exposure, leaving credit spreads and income the main return drivers.
  • Floating rate bond ETFs: Floating rate coupons can reprice quickly as reference rates move higher.
  • CLO ETFs: CLOs invest in floating rate loans, allowing income to quickly reset higher as reference rates rise.
Rising rate toolkit

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Gearing up for a steeper climb

October 2026

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