A fundamental principle of bond investing is that market interest rates and bond prices generally move in opposite directions. This phenomenon is generally known as interest rate risk.
Declining interest rates make bond prices rise and bond yields fall. Conversely, rising interest rates cause bond prices to fall, and bond yields to rise.
Over the past few months, interest rates have risen, and bond process have fallen. This is the reason why bond portfolios have experienced a decline in market value. While the rising interest rates have increased bond yields, they have had a negative (converse) impact on bond prices. This process will continue until interest rates stabilize. When interest rates eventually reverse, market values should increase, and yields should decrease.
Current market value declines are not permanent. Accounts have suffered unrealized losses as the result of the current interest rate environment. Only a decision to immediately liquidate current positions will result in the realization of such losses. Unless you advise us that your investment objective has changed or you direct otherwise, absent other mitigating circumstances, we do not currently intend to liquidate bond positions.
Of course, should you have any questions, the members of your Calamos Wealth Management team are here to address them.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Calamos Wealth Management, LLC [“Calamos]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Calamos. Please remember to contact Calamos, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Calamos is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Calamos’ current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at wm.calamos.com. Please Note: If you are a Calamos client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.