Investing tips amid a rising interest rate environment

By MarketsFOXBusiness

Protecting your portfolio from a rising interest rate environment

Calamos Investments CEO John Koudounis on the challenges investing in this market environment.

Volatility remains a headwind for U.S. stocks amid a rising interest rate environment, but one investment strategist said there are ways to deal with the market instability.

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“When we look at the markets we take a long-term perspective,” Calamos Investments CEO John Koudounis told FOX Business’ Maria Bartiromo on Thursday.

On Wednesday the Dow surged more than 600 points following Federal Reserve Chairman Jerome Powell’s dovish comments on interest rates. It was the biggest rally in eight months.

But Koudounis wasn’t alarmed.

“It was not a huge surprise that the Fed was going to be accommodating,” he said. “A lot of the numbers that were building up to this led to this decision. So there is going to be a lot of noise back and forth.”

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Koudounis added that there are ways to protect your portfolio from volatility. He discussed some market safe havens.

Market Neutral Funds

The market-neutral strategy is designed to produce a portfolio that attempts to avoid general U.S. stock market risk.

“It’s had huge inflows in the last couple of years,” he said. “It’s up over $6 billion in terms of [assets under management] on that particular fund.”

Convertible Bonds

Convertible bonds are issued by corporations and can be converted into a certain number of shares of common stock of the issuing company. Koudounis said they have been the “secret” to their managers’ success.

“If you look at the market since ‘08 we’ve had 21 corrections that have been over 5 percent in the equity markets -- all but one of them – convertibles have outperformed,” he said.  “So just the mere fact that the convertibles get you to the upside and limit your downside — they work.”

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