Investor's Business Daily writes that, "Rising Interest Rates Can Make You Money." The article states, "Debtors hate rising interest rates, but investors? Some are cheering them. Retirees and others focused on holding a diversified portfolio can now get returns with less risk.... Now assets tied to interest rates are back in vogue. Due to the Federal Reserve raising interest rates to tamp down inflation, advisors say they're showing clients investments they haven't touted in years. Assets like CDs, bonds and bond ladders, money market funds, annuities and more are back in fashion. Some of these low-risk assets are offering returns of 6% and more. Perhaps that's less than thrilling -- until you recall that the S&P was down 26.7% in mid-October and the Nasdaq was down more than 32%."
It explains, "Conservative investors have been frustrated by the Fed's policies for more than a decade, when it held interest rates extremely low -- some would say artificially low. These moves pounded the bond market. And they left investors moving more money into stocks and stock-based funds in an effort to pull in returns. 'The fact that the Fed funds rate spent better part of 15 years at or close to zero was certainly a surprise,' said Greg McBride, chief financial analyst at Bankrate.com. Go back to December 1980 and the Fed funds rate was an astounding 19% to 20%, the highest ever. It had raised interest rates in an effort to combat double-digit inflation. By July 1990, inflation was down and the Fed funds rate was 8%, and by February 1995 it was 6%. Even as recently as March 2000, the Fed funds rate was still 6%."
IBD says, "If you haven't shopped for better savings rates for your emergency fund or other cash accounts, now's the time. Those 1% or less bank savings rates are so 2021. Accounts used by investment banks to hold funds between trades (some are money market funds and some are hybrid accounts) have been moving up steadily. 'They're offering 3% or even 4%,' said Reese. And money market fund rates are in the same range, says Bankrate.com. Even some previously stingy banks have started to raise savings interest rates."
Barron's piece, "The Best Income Investing Ideas for 2023," also has a brief section on "Cash Alternatives." They tell us, "Cash has become an appealing asset as short-term rates have risen from near-zero to more than 4%. Yields could hit 5% if the Federal Reserve continues to tighten monetary policy. Investors don't have to do much to get 4% yields now, with the $216 billion Vanguard Federal Money Market fund (VMFXX) yielding 4.2%."
The article explains, "There are plenty of other options. The SPDR Bloomberg 1-3 Month T-bill ETF (BIL) and iShares Short Treasury Bond ETF (SHV) yield over 4% and hold short-maturity Treasuries. The Vanguard Ultra-Short-Term Bond fund (VUBFX) takes a little more risk by holding corporate bonds maturing in less than a year. It yields more than 5%."
Barron's comments, "Berkshire Hathaway's Buffett favors direct investment in ultrasafe U.S. Treasury bills, which have maturities of one year or less. Individual investors can participate in regular auctions of three-, six-, and 12-month bills, as well as those maturing in four or eight weeks. T-bills can be purchased on the TreasuryDirect website or through banks and brokers. The three-month bill now yields 4.2%."
They add, "One nice aspect of Treasury bills, relative to bank certificates of deposit and corporate debt, is that the interest they generate is exempt from state and local taxes. That’s a particularly big plus for investors facing punishing 10%-plus state and local tax rates in New York and California."
In other news, a press release entitled, "Sarah ten Siethoff Named Deputy Director of the Division of Investment Management," tells us, "The Securities and Exchange Commission announced today that Sarah ten Siethoff has been named Deputy Director of the Division of Investment Management. In addition to serving as Deputy Director, Ms. ten Siethoff will continue serving as the Associate Director of the Division's Rulemaking Office, a position she has held since 2018."
SEC Chair Gary Gensler comments, "I thank Sarah ten Siethoff for taking on the role of Deputy Director of the Division of Investment Management. Sarah has provided invaluable counsel both as Acting Director of the Division and as head of its Rulemaking Office. She brings skill, judgment, and leadership to her service to the public, and I look forward to her many contributions in the new year."
William Birdthistle, Director of the Division of Investment Management, adds, "Sarah ten Siethoff provides extraordinary expertise and public service to the Division of Investment Management. We rely deeply upon her leadership in her roles as both the Division's Deputy Director and the head of our Rulemaking Office and are grateful for her willingness to serve in both roles."
"I am honored to serve the Commission in this new additional role and continue working with the talented staff in the Division of Investment Management to advance the Commission’s important mission," says Ms. ten Siethoff. The release adds, "Ms. ten Siethoff served as Acting Director of the Division of Investment Management from January 2021 to December 2021. She joined the Division of Investment Management in 2008 and previously served in a variety of roles in its Rulemaking Office, including Deputy Associate Director and Assistant Director.... Mr. Birdthistle also selected Kaitlin Bottock and Thoreau Bartmann to serve as Co-Chief Counsels of the Division of Investment Management, completing his senior leadership team."
