Tag: interest rates
One expert suggests the current yield curve inversion—often called a harbinger of recession—is due more to declining inflation expectations and the weight of negative bond yields in Europe.
"The new normal for interest rates simply means that retirement investors have to take more risk,” says Steve Foresti, CIO at Wilshire Consulting.
They also expect the bull market will end in the coming year.
Higher short-term rates translate into additional income for investors from their bond portfolios, and their fixed-income allocation should provide greater ballast for the more volatile equity component of their portfolios, says Joseph Davis, with Vanguard.
An Insights article from Cammack Retirement notes how different fixed income vehicles perform under a rising interest rate environment and suggests DC plan sponsors offer a diverse menu of options for participants.
Willis Towers Watson researchers present various opportunities “outside of traditional hedging assets other than long corporate credit that may be added to [pension funds'] hedging portfolios to help provide a diversifying source of long-term credit premia.”