Welcome!

News Feed Item

Canadian investors unprepared for the impact of rising interest rates: CIBC

Poll reveals Canadians, especially baby boomers, don't know rising rates can hurt their investment portfolios for retirement

TORONTO, Jan. 24, 2014 /CNW/ - A new poll from CIBC Asset Management by Leger finds that almost 60 per cent of Canadians with a retirement portfolio are unaware that rising interest rates can erode the value of some of their investments. And, those investors closest to retirement - the "baby boomer" generation between the ages of 55 and 64 - are particularly in the dark, with 65 per cent unaware of the impact of rising rates.

Rising rates can negatively impact investors who own bonds or fixed income securities because when interest rates rise, bond prices fall. An extended period of falling interest rates, and a flight to safety from equity market volatility has resulted in many Canadians investors loading up on bonds in recent years. But, most experts agree that this era of record-low interest rates has reached an end.

Key poll findings include:

  • 58 per cent of Canadians are unaware that rising rates will cause some investments to lose value, with that number climbing to 65 per cent for baby boomers (55-64 years of age - a demographic typically with a higher percent of fixed income assets), and;
  • 54 per cent of Canadians are not thinking about changing their retirement savings strategy in a rising interest rate environment, with that number climbing to 62 per cent for baby boomers.

"Nobody knows exactly when and how fast interest rates will rise, but Canadians need to understand the risk this poses to their retirement funds and plans," said Steve Geist, President, CIBC Asset Management Inc. "Canadians understand the impact that rising rates have on household expenses, such as mortgages and loans. But, it's equally important for Canadians, especially those approaching retirement and preparing to draw income from their portfolios, to be aware of the impact that rising rates can have on their investments."

Strategies for investors to prepare for rising rates:

  • Work with an advisor to find the right fixed income mix: The fixed income market is complex and a financial advisor can help you assess your portfolio and understand its overall sensitivity to rising interest rates. Fixed income will remain an important part of investors' overall portfolio mix, however diversifying into corporate bonds could be a favourable strategy in a rising rate environment. An advisor can help you find the right mix for your financial goals.

  • Consider "floating rate" investments for additional rising rate protection: Unlike typical bond investments, the interest on floating rate loans rises with benchmark rates. CIBC Asset Management recently introduced an investment solution that provides Canadians access to this unique asset class.

  • Look at shorter bond durations: Duration is a measure of how sensitive the price of a bond is to changes in interest rates. The shorter the length of time for a bond to reach maturity, the less interest rate risk is involved. Portfolio managers will often use this strategy as one way to mitigate risk in actively managed mutual funds.

The poll was conducted by Leger through a Web survey in December 2013 among a representative sample of 1,503 English- or French-speaking Canadians, 18 years of age or older, who have an investment portfolio for retirement. Using data from Statistics Canada, the results were weighted according to gender, age, region, language spoken at home, education and whether or not children are present in the household to ensure a sample representative of the entire population under review.

About CIBC Asset Management

CIBC Asset Management (CAM), the asset management subsidiary of CIBC, provides a range of high-quality investment management services and solutions to individual and institutional investors. CAM's offerings include: a comprehensive platform of mutual funds, strategic managed portfolio solutions, discretionary investment management services for high-net-worth individuals, and active portfolio management for institutional clients. CAM is one of Canada's largest asset management firms, with more than $90 billion in assets under management as of Dec. 31, 2013.

SOURCE Canadian Imperial Bank of Commerce

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and ...
18th Cloud Expo, taking place June 7-9, 2016, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some...
@DevOpsSummit taking place June 7-9, 2016 at Javits Center, New York City, and Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 18th International @CloudExpo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world.
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
How will your company move to the cloud while ensuring a solid security posture? Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is ...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
SYS-CON Events announced today that Hanu Software will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Leveraging best-in-class people, processes, and technologies, Hanu provides high-quality, high-value software development and business process outsourcing services to independent software vendors (ISVs) and enterprises.
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
SYS-CON Events announced today that IBM Cloud Data Services has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. IBM Cloud Data Services offers a portfolio of integrated, best-of-breed cloud data services for developers focused on mobile computing and analytics use cases.
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...