Rising interest rates not all bad
Significant upside can be experienced during a period of rising interest rates by adopting a defensive strategy that utilises fixed income investments, according to FIIG Securities managing director Jim Stening.
He reminded investors of the cyclical nature of financial markets, saying that as rising interest rates slowed the economy, rates of return would drop to 4 per cent.
“Locking in your returns now at 6 or 7 per cent will allow you to maintain a strong rate of return, even when rates fall again,” Stening said.
“It’s a good opportunity to pick up returns by pushing out on the yield curve.”
He said investors who moved towards more diversified fixed income investments could receive greater rewards with minimal risk.
“There are opportunities that are available by doing simples changes in the way you allocate,” Stening said.
“People need to consider whether they are getting value and getting paid for the risk they are currently taking.”
FIIG is a fixed income specialist servicing mid-tier corporates, institutions and private investors.
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