How to invest when rates are rising

How to invest when rates are rising

Stocks that have historically done well at times of higher inflation and interest rates are likely to do so again this time, despite the unusual nature of the economic recovery, according to the guests on the latest FTAdviser podcast. 

Paul Craig, portfolio manager at Quilter, said: “It is not just a question of knowing that rates are rising; it is about understanding the market’s reaction to that. That’s why quality companies work best: they have the track records.”

Christopher Rossbach, chief investment officer at J Stern and Co, said: “You have to take a long-term perspective. Economies and markets and companies are resilient. 

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"If the company can show it has pricing power and innovation, then it will be well positioned for what comes next, and the winners of the past can be winners again.” 

Fellow panellist Steven Bell, chief economist at BMO, said: “A balanced portfolio with equities and bonds would offer protection in most scenarios, and from geo-political risk, but not from inflation. In an inflationary environment, both bonds and equities fall. The best thing to do is run lower-risk portfolios.”   

You can listen to the full podcast on the link above.