Late last week, Capital Advisors published, "How to Weather a Rising Interest Rate Environment." The piece says, "It has been more than a decade since the last interest rate tightening cycle. As we dust off this report written more than ten years ago for corporate treasurers on how to weather a rising rate cycle, we are struck by how little we needed to revise its content despite a vastly different cash investment landscape today.... Despite a few false starts, it appears that in a few weeks the time may finally be here for the Janet Yellen Fed to start increasing interest rates. While the short-term investment community aches to break the spell of the near zero interest rate policy (ZIRP), higher rates can be an unpleasant experience if not taken seriously.... All else being equal, higher rates result in immediate unrealized losses in existing holdings. Credits may see more losses than government securities because of inherently higher risks. This normally isn't a big concern if one intends to hold securities to maturity, assuming that the terms are short and credit quality is high. However, it may be problematic if one has to sell assets prior to maturity and turn unrealized losses into realized ones. These risks remain the same from one rate tightening cycle to the next.... With those familiar and new factors in mind, we are issuing our revised guidance for corporate treasury professionals on how to prepare for a rising interest rate environment. Following are several portfolio management techniques available to help diminish the risk presented by higher interest rates. In fact, when managing portfolio duration, yield curve positioning and security selection properly, rising interest rates can add value, particularly for short duration or held-to-maturity portfolios."

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