For investors looking for credit exposure to bonds
with less interest rate risk, Hyman suggests interest rate hedged strategies such as IGHG and HYHG.
It also means that INC has
less interest rate risk than AGG, and may be less impacted by a rise in rates.
Aggregate fund (AGG), INC has
less interest rate risk and more credit risk.
So short term bonds have
less interest rate risk, but offer much lower yields.
Since short - and intermediate - term TIPS, as well as the floating - rate loans and the ABS / CMBS swapped for CPI, receive the same inflation adjustment as other, longer - dated inflation - linked securities, they may be able to provide similar protection from inflation, but with
less interest rate risk.
Because their coupons are tied to a short - term rate, senior loans have
less interest rate risk and are considered a floating rate instrument.