As an investor, my client's approach is conservative
and my client uses fixed income to generate income

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The hidden risk: Yield risk

Bonds under-earning their income potential

Average portfolio allocation1

Portfolio allocation: Conservative generate income

Despite the stated objective to generate income, the bond allocation in this example is potentially jeopardizing the income goal.2

Based on the portfolios we’ve analyzed, a portfolio like this is typically comprised of 15% equities and 85% bonds, allocated as shown above.3

For illustrative purposes only.


Understanding this risk

  • Investors with a conservative risk tolerance might lean toward cash and traditional bond strategies for a measure of stability.
  • But that also comes at a cost: opportunity lost. In today’s low-yield world, achieving an income stream requires taking on some risk.

Help manage your hidden risks

Consider adding higher-yielding fixed income options, such as high yield bonds or international debt, to target an income boost.

Let us help you build a better fixed income portfolio for your client.

Contact us

 


 

or use the Rising Rates Focused Income portfolio strategy to help manage your risk with an all-in-one strategy.

Rising Rates Focused Income ETF Portfolio Strategy

This investment strategy seeks primarily current income, and to a lesser extent, longterm capital appreciation. The strategy aims to generate income while mitigating the impact of rising interest rates through exposure to equity and fixed income asset classes. It invests exclusively in iShares Exchange Traded Funds which may pay fees and expenses to BlackRock that are in addition to the fees payable to BlackRock for managing the account. More detailed information on this strategy is available upon request.

Allocations %
Credit 65.0%
Equity 35.0%

How is technology helping BlackRock manage risk?

Hear from Rick Rieder, BlackRock's Global Chief Investment Officer of Fixed Income, on how the team uses technology to better understand risks in the fixed income markets.

  • View transcript

    Q: How is technology helping BlackRock manage risk?

    The investment world has evolved to where markets have become more efficient in many ways. Social and other media more broadly creates an incredible flow of information. To regularly out-pick the market based on one specific piece of information is impossible. So what should you do? Research, research, research. And analyze. And then allocate your portfolio in a way that ensures you’ve got relative value decisions all around the world, all around the capital stack, and around different asset classes. Then do it over and over again.

    It’s a way of tilting the odds in your favor. By repeating that process a million times over, you’re creating a dynamic where you’re not just diversifying to reduce risk, but you’re diversifying in a way that you’ve got a lot of relative value calls that make sense. When you do it over and over, the odds are working for you on a regular basis.

Well positioned to identify risk

BlackRock is powered by Aladdin®, our powerful risk-analysis and portfolio management technology. Our Aladdin® risk technology platform oversees $17+ trillion in assets under management and is relied upon by 100+ institutions.

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