Rise Above
Rising Rates


Investors Shouldn’t Fear Rising Rates

As global monetary conditions tighten, investors may be concerned that rises in interest rates may be bad for bondholders. However, while bond prices typically fall when interest rates rise, the yield for those investments rises. Reinvesting into higher yields over time can actually increase a bond portfolio’s overall return potential. This can help offset the initial negative price impact of rising rates.

The impact of rising rates on bond portfolios

Source: PIMCO

Rising Rates Don’t Impact All Bonds the Same

News about the bond market typically focuses on government securities, which tend to be the most sensitive to rising rates. In reality, the bond market is exceedingly diverse, and each sector responds differently to economic and market trends. Skilled active managers with flexibility and resources may find promising investment opportunities, even in a rising rate environment.

Historical performance in periods of rising rates

Past performance is not a guarantee or a reliable indicator of future results. The performance data above is not representative of the performance of any PIMCO product. Source: PIMCO, Bloomberg Barclays U.S. Treasury Index; Bloomberg Barclays U.S. MBS Index; Bloomberg Barclays U.S. Credit Index; Bloomberg Barclays Global Agg Credit Index; Bloomberg Barclays U.S. Corporate High Yield Index; Bloomberg Barclays Global High Yield Index; J.P. Morgan Hedged USD GBI Ex USA Index; J.P. Morgan EMBI Global Index. The global credit, global high yield, non-U.S. developed and emerging markets indexes did not exist during the periods marked n/a. MBS stands for Mortgage Backed-Securities.

An Action Plan for Rising Rates

PIMCO has been helping investors achieve their goals across changing rate environments for 45+ years. Our actively managed strategies seek to add value through sector diversification and individual security selection, in an effort to capture attractive yield and mitigate risk, whether interest rates go up or down.

US Short-Term Fund

A U.S-focused strategy that invests in both money market instruments and short-term fixed income securities.

View Fund 

Low Duration Income Fund

A global multi-sector strategy that implements PIMCO’s best income-generating ideas while maintaining low interest rate exposure.

View Fund 

Dynamic Bond Fund

A benchmark-agnostic strategy that invests across global fixed income sectors with duration that may range from -3 to +8 years.

View Fund 

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For professional use only. Past performance is not a guarantee or a reliable indicator of future results. PIMCO Europe Ltd (Company No. 2604517) and PIMCO Europe Ltd - Italy (Company No. 07533910969) are authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The Italy branch is additionally regulated by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act. PIMCO Europe Ltd services and products are available only to professional clients as defined in the Financial Conduct Authority’s Handbook and are not available to individual investors, who should not rely on this communication. | Pimco Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), Pimco Europe GmbH Italian Branch (Company No. 10005170963) and Pimco Europe GmbH Swedish Branch (SCRO Reg. No. 516410-9190) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch and Swedish Branch are additionally supervised by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act and the Swedish Financial Supervisory Authority (Finansinspektionen) in accordance with Chapter 25 Sections 12-14 of the Swedish Securities Markets Act, respectively. The services provided by Pimco Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. | PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-, Brandschenkestrasse 41, 8002 Zurich, Switzerland, Tel: + 41 44 512 49 10. The services provided by PIMCO (Schweiz) GmbH are not available to individual investors, who should not rely on this communication but contact their financial adviser.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Sovereign securities are generally backed by the issuing government. Obligations of U.S. government agencies and authorities are supported by varying degrees, but are generally not backed by the full faith of the U.S. government. Portfolios that invest in such securities are not guaranteed and will fluctuate in value. Inflation-linked bonds (ILBs) issued by a government are fixed income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Commodities contain heightened risk, including market, political, regulatory and natural conditions, and may not be suitable for all investors. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor, there is no assurance that the guarantor will meet its obligations. REITs are subject to risk, such as poor performance by the manager, adverse changes to tax laws or failure to qualify for tax-free pass-through of income. Investments in private assets could be volatile; an investor could lose all or a substantial amount of its investment. Tail risk hedging may involve entering into financial derivatives that are expected to increase in value during the occurrence of tail events. Investing in a tail event instrument could lose all or a portion of its value even in a period of severe market stress. A tail event is unpredictable; therefore, investments in instruments tied to the occurrence of a tail event are speculative. Derivatives may involve certain costs and risks, such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.

PIMCO GIS Funds: Global Investors Series plc is an umbrella type open-ended investment company with variable capital and is incorporated with limited liability under the laws of Ireland with registered number 276928. The information is not for use within any country or with respect to any person(s) where such use could constitute a violation of the applicable law. The information contained in this communication is intended to supplement information contained in the Funds’ prospectus and must be read in conjunction therewith. Investors should consider the investment objectives, risks, charges and expenses of these Funds carefully before investing. This and other information is contained in the Funds’ prospectus. Returns are net of fees and other expenses and include reinvestment of dividends. The performance data represents past performance and investment return and principal value will fluctuate so that the PIMCO GIS Funds shares, when redeemed, may be worth more or less than the original cost. Potential differences in performance figures are due to rounding. The Funds may invest in non-U.S. or non-Eurozone securities which involves potentially higher risks including non-U.S. or non-Euro currency fluctuations and political or economic uncertainty. Please note that not all Funds are registered for sale in every jurisdiction. Please contact PIMCO Europe Ltd for more information. ©2018 PIMCO.