How To Protect Your Bond Portfolio With RISE

bonds market

With the Fed meeting this week policymakers are expected to start the process of rolling back their $4.4 trillion balance sheet. The beginning of this reversal has left bond investors on edge.

For those weary investors, Bryce Doty of Sit Investments advises protecting their bond portfolios with RISE. “Not doing anything would be a risky move, RISE can take some of that off the table,” he says.

The Sit Rising Rate ETF (NYSE:RISE) is a strategic interest rate-hedging tool that gives investors the opportunity to benefit from the rise in the interest rates of U.S. Treasury notes. The portfolio targets a negative 10-year duration using futures and options on 2, 5 and 10-year maturity Treasury futures contracts. It can be used strategically as a hedge, allowing investors to keep their bond positions but providing protection when rates rise.

You can find more details about RISE right here, including the “Interest Rate Defense Calculator” which can be used to quickly figure the impact of rising rates on various bond holdings, and to determine the benefit of hedging.

The Sit Rising Rate ETF (NYSE:RISE) was trading at $22.94 per share on Tuesday morning, up $0.02 (+0.09%). Year-to-date, RISE has declined -3.49%, versus a 12.77% rise in the benchmark S&P 500 index during the same period.

RISE currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #9 of 14 ETFs in the Non-Traditional Bond ETFs category.