Income risk

Income risk

The possibility that a portfolio's dividends will decline as a result of falling interest rates. Income risk is generally greatest for money market instruments and short-term bonds, and least for long-term bonds.

Income Risk

The risk that the yield of a fund investing in short-term debt securities will decrease because of a decline in interest rates. For example, suppose a mutual fund invests in money market securities with maturities of less than a year. If interest rates decline, then the yield on the money market fund will also decline because when the money market securities mature, the returns are reinvested at lower interest rates. Income risk is the same concept as interest rate risk, but the former applies to funds, while the latter pertains to individual debt securities.
References in periodicals archive ?
"Households of different ages, incomes, and wealth are affected differently by changes in policy, but our study finds that as policymakers continue to try to expand affordable housing, rent control policies can be a useful tool and a bulwark for residents struggling with the cost of living in the face of rising income risk."
The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices, said Dr.
Tom Royston, associate director at DTZ Investors, said: "This sale is in accordance with the fund's objectives, disposing of a non-core asset which presented the client with a high concentration of income risk in 2024 and assists with the repositioning of the client's portfolio targeting multi-let assets offering diversified income in large urbanised environments."
DRE's portfolio of almost entirely industrial properties, after the sale of its MOB portfolio, possesses scale, diversification and granularity that should limit rental income risk relative to lower-rated peers, such as Terreno (BBB-) and Rexford (BBB-).
If you reached for income and have taken on a larger position in High Yield bonds (or are using dividend paying stocks/REITS as proxies for bonds), you may be taking equity like risk rather than AA/AAA rated fixed income risk. Proper, active, fixed income management is essential to navigating a bear market.
For example, smallholders in sub-Saharan Africa are diversifying crops to spread production and income risk. Evidence also shows that growing a mixture of crop varieties, where the best seeds from field trial plots are combined with traditional varieties for the next planting season, enables farmers to increase the climate resilience of their crops.
There are a number of risks being taken by the Chinese project companies, including political risk (including change, or change of view, of the government), technical or construction risk, market risk (inputs prices, interest and exchange rates) and income risk. Ideally, the outcome is that the cost of the project is amortised and the Chinese project company is able to exit.
whereas, Zhou (2014) argued that the overall risk of the bank can be reduced if interest income risk is managed.
While the sign of [d.sub.u] unambiguously indicates direction, Kimball (1990) links greater prudence, that is, [P.sub.v](y) > [P.sub.u](y) for all y, to greater precautionary saving in response to future income risk. In contrast, we link a greater value for the Schwarzian, that is, [S.sub.v](y) > [S.sub.u](y) for all y, to the strength of the precautionary motive for saving, not as measured by the increase in saving, but instead as measured by the decline in the marginal rate of time preference.
Those who don't declare extra income risk prosecution."
An ETF based on government fixed income risk from an Asian borrower has also been reportedly in the pipeline.
Chad Tope is one of the top distribution managers responsible for trying to get Americans to protect themselves against death and retirement income risk.