Paul Kim, Simplify Asset Management – Embracing Convexity Through The ETF Structure | #402
The Meb Faber Show - Better Investing
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Is There a Strategic Interest Rate Hedge?
Investors have a lot more duration risk, not just in their fixed income, but in actually most of their risk assets. If you buy tela, or basically anything that has long term profits down the road, they have a lot of sensitivity to interest rates because the valuation is really based on discounted cash flows. It matters what discount rate you do. When rates go up, the nasack 100 and any technimes tend to go down. And so if you think about a way to hedge an existing portfolio of mostly risk assets, is there an efficient way to take out at least that one risk of a very significant increase in rates? This truly is a porfolio level interest ra hedge.
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