In contrast, dividend growth stocks have historically demonstrated less interest rate sensitivity and may be an attractive way to maintain
yield in a rising rate environment.
What we can say is that the historical record of defensive
indices in rising rate environments is strong — and that periods when defensive indices fail have been rare and short.
These are probably safer than municipal bonds, but rising interest rates would have a similar effect on asset pricing — water stocks would take a
dip in a rising rate environment.
However in reality, there are other simultaneous factors so the results have been less obvious but there is potential for high commodity index
returns in rising rate environments.
Fifty - five percent of advisers believe floating rate loan funds are the most attractive
option in a rising rate environment and are incorporating them into client portfolios.
Typically in rising rate environment, stocks have historically outperformed traditional bonds.1 The Fed will generally raise interest rates to cool a growing economy and stocks usually continue to appreciate during this time.
Another important difference is how they
react in a rising rate environment, given rates are likely to continue normalizing with the Fed possibly hiking rates twice this year.
These stocks generally offer competitive yield and upside potential through capital appreciation, and they have historically delivered attractive
performance in rising rate environments relative to the highest yielding stocks.
These stocks generally offer competitive yield and upside potential through capital appreciation, and they have historically delivered attractive performance
in rising rate environments relative to the highest yielding stocks.
Stocks with a history of consistently growing their dividends have historically tended to perform well and exhibit less
volatility in a rising rate environment, while high yielding dividends, often considered «bond - like proxies,» have tended to be more vulnerable (due to their high debt levels) and have historically followed bond performance when rates rise.
In addition, we have allocated fixed income exposure to inflation - protected U.S. government bonds that will help diversify
risk in a rising rate environment driven primarily by higher inflation.
Personal Loans > Resources > Learn About Personal Loans > Basics > Taking Out a Personal Loan in a Rising Rate Environment
The business development company easily overearns its dividend with net investment income and Goldman Sachs BDC has positive interest rate sensitivity, setting the company up for net interest income
gains in a rising rate environment.
But cash isn't such a bad
thing in a rising rate environment as the yield pick up rather quickly on money market accounts or you can roll some of that over into higher yielding short - term bonds.
To address this short - term trend, we recommend a tactical position in Treasury Inflation Protected Securities (TIPS) and other fixed income categories which may provide
protection in a rising rate environment, such as leverage loans and absolute - return strategies.