Invest for tomorrow by navigating rising rates and inflation
Protecting and enhancing your wealth in changing markets
Is today’s inflationary environment giving you that shrinking feeling? If so, we can help. Our insights and ideas can help you think about repositioning your portfolio to factor in rising interest rates and shifting inflation expectations.
Volatility is set to be a hallmark of the coming period, with countries and regions on different paths in terms of growth and monetary policy as geopolitical turbulence increases. But we are confident this environment will create opportunities. Diversification is key – across public and private markets – and we can help you navigate the complexity.
Diversification does not guarantee a profit or protect against losses.
Navigating opportunities in changing markets
In today’s inflationary environment, with shifting market conditions and geopolitical tensions, protecting and enhancing wealth can be challenging for investors. We’re at the beginning of a divergence; monetary policy and bond yields are on different paths and the impact of inflation is being felt differently in different regions. In this environment, investors will need to consider their options and structure their investments accordingly. That means looking for the right market signals and being ready to respond when opportunities arise.
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Navigating Rates: what investors need to know
Inflation, geopolitical conflict and energy prices are all on investors’ minds – and they’re all connected. Inflation was already high in many parts of the world, and the invasion of Ukraine by Russian armed forces is pushing inflation even higher as energy prices soar and supply chains are disrupted. In response to inflationary pressures, the US Federal Reserve has begun its first rate-hike cycle since 2018, and the European Central Bank may not be far behind.
Multiple factors have been pushing inflation higher
CPI forecasts have been rising in developed nations (2021-2022)
Source: Consensus Economics. Data as at 20 June 2022. Past performance is no guarantee of future results.
What does this mean for investors?
Higher inflation rates mean higher prices for businesses and consumers, which could impact economic growth. Commodities and certain equities – including value stocks – may be among the more attractive investment opportunities in this environment.
Coming amid a tense global backdrop, higher interest rates make it more expensive to borrow money, and they may hurt certain types of fixed-income securities.
Currency exchange rates have taken notable swings as geopolitical volatility increased, prompting a flight to “safe-haven” currencies.
The good news is that while the absolute-return backdrop is challenging, there could be an increasing number of relative-return opportunities for active investors. Agility is key in this environment.
Making sense of volatile markets
From supply chain disruptions to diverging economies and geopolitical flare-ups, volatility may become a fixture of market conditions for the foreseeable future. Understanding that there might be more turbulence ahead – and steering through it – will be crucial for investors.
Investors need to factor rising interest rates into their portfolios at a time of uncertainty about inflation and the path of monetary policy. We can help you understand what shifting interest rates mean for your portfolio.
Look for active opportunities following the Fed’s hawkish move
In a complex and volatile environment, inflation can have an outsized impact on your investments. Amid the rising price of goods and services, it’s critical to consider how you combat it in your portfolio.
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