Disclaimer
Robeco Institutional Asset Management B.V. (DIFC Branch) is regulated by the Dubai Financial Services Authority (“DFSA”) and only deals with Professional and Market Counterparty Clients and does not deal with Retail Clients as defined by the DFSA.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.
Please confirm that you are a professional investor and/or institutional investor and that you have read, understood and accept the terms of use for this website.
Fixed income
Interest rate risk
Interest rate risk refers to the potential for investment losses due to changes in interest rates. It primarily affects fixed-income investments, like bonds, as bond prices and interest rates have an inverse relationship: when interest rates rise, bond prices tend to fall, and vice versa.
This risk impacts the value of existing bonds because newer bonds might be issued with higher yields, making older, lower-yielding bonds less attractive to investors, which can lead to a decrease in their market value.
Impacts borrowers and lenders
Interest rate risk also affects borrowers and lenders, as changing rates can increase the cost of borrowing or reduce investment returns. Investors manage this risk through strategies like adjusting bond maturities, using hedging techniques, or diversifying their portfolio. In general, longer-term bonds are more sensitive to interest rate changes than shorter-term bonds, making them riskier in a fluctuating interest rate environment.
