Part 2: The impact of rising policy rates on asset classes
Interest rates are rising. What does this mean for you and your clients?
The most correct answer to this, unfortunately, is that it depends.
In trying to understand the impact on portfolios, we’re guided by our investment compass which gives direction on which asset classes and styles are likely to perform well in different stages of the market cycle.
Over the last few years we’ve certainly jumped around the different quadrants of this compass as the Covid-19 pandemic and recently the Ukraine crisis have shifted the interest rate normalisation path, particularly for the US. Going into 2022, we appeared to be in the reflation quadrant as inflation was rising and growth was strong. With inflation rising more aggressively this year and growth potentially being impacted negatively by the war, this increases the risk of the global economy moving closer to a slowdown scenario.
Click here for the full article where the investment compass is discussed in detail along with the likely outcome per asset class.