Resource Logo

Hello, you are using an old browser that's unsafe and no longer supported. Please consider updating your browser to a newer version, or downloading a modern browser.

Receive Updates
Resource Arrow Back to all
Date: May 29, 2018

How Quantitative Tightening May Impact Fixed-income Portfolios [Video]

Created with Sketch. Run Time: 1:47
Michael Terwilliger Portfolio Manager Resource Credit Income Fund
With the Fed no longer actively suppressing rates, traditional fixed-income products will face pressure.

The Federal Reserve is starting to reduce its balance sheet after a prolonged period of cheap lending.

Let’s recall that after the Recession, the Federal Reserve bought more than $4 trillion dollars of mortgage and Treasury bonds to encourage borrowing. Then, in May of 2013, Fed chairman Ben Bernanke announced the Fed would stop buying new securities.

His announcement agitated the credit markets. The 10-year Treasury climbed over 130 basis points, and equity market volatility spiked. Yet, this didn’t end the Fed’s accommodative monetary policy. From 2014 through September of 2017, the Fed keep its balance sheet constant: meaning, if $100 billion of mortgage securities matured, the Fed purchased $100 billion of new securities. This helped keep interest rates low.

The Fed, however, dramatically reserved course at the end of 2017. In September, then-chairwoman Janet Yellen announced the Fed’s plan to slowly unwind its balance sheet. Beginning in October, it started allowing $10 billion of securities to roll off its books. And this January, it doubled the size of its tightening. By year end, the Fed intends to reach a pace of $50 billion per month.

This process some are calling “quantitative tightening” will effectively withdraw liquidity from global credit markets and put pressure on interest rates. So, what does this mean for investors? With the Fed no longer actively suppressing rates, traditional fixed-income products will face pressure. In this environment, we believe an actively managed credit portfolio focused on floating-rate loans may be best positioned to generate income with downside protection.

This information is educational in nature and does not constitute a financial promotion, investment advice, or an inducement or incitement to participate in any product, offering or investment. It is not intended to be used as a tool to determine your specific financial situation, tax status, investment objectives, investment experience, suitability for any specific investment, risk tolerance or investment profile. Resource is not adopting, making a recommendation for or endorsing any investment strategy or particular security. The materials included herein are the property of Resource and may not be repurposed in a separate likeness without the express written consent of Resource.

Resource is the marketing name for Resource Real Estate, LLC, Resource Alternative Advisor, LLC, and their affiliates. Resource may distribute certain products through Resource Securities LLC, a wholly owned broker/dealer, Member FINRA/SIPC


The information contained herein does not constitute an offer to sell or a solicitation to purchase securities. Such offers or solicitations can only be made by means of a prospectus. Prior to making any investment decision, you should read the applicable prospectus carefully and consider the risks, charges, expenses and other important information described therein. The value of your investments may decline, and you could lose some or all of your investment. To obtain a prospectus containing this and other information, please call (866) 773-4120 or download the file from Read the prospectus carefully before you invest.


Resource has an interval fund that is distributed by ALPS Distributors, Inc. (ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203). Resource Alternative Advisor, LLC, Resource Real Estate, LLC, their affiliates, and ALPS Distributors, Inc. are not affiliated.


Performance data quoted represents past performance. Past performance is no guarantee of future results and investment returns and principal value of the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted above. For performance information current to the most recent month-end, please call toll-free (866) 773-4120 or visit


All statements and information other than statements of historical fact included on this website regarding strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. When used on this website, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. You should not place undue influence on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make on this website are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved because of the number of risks and uncertainties, many of which are beyond our control, including but not limited to uncertainties concerning the properties being operated and sold or refinanced, leverage and meeting debt service obligations, operating properties in different locations throughout the U.S., general, market or business conditions and changes in laws or regulations. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. To check the background of Resource Securities LLC or any registered individual, please go to FINRA’s BrokerCheck.