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Audience

Diversification in a rising interest rate environment

27/04/2018

A changing investment climate, in which rising short-term US interest rates may be altering correlations between traditional asset classes, requires new diversification strategies to respond effectively.

For much of the period since the financial crisis, developed market government bonds played a diversifying role in periods of short-term weakness in equity markets.

Today, this dynamic could be changing. In February 2018, rising US interest rates meant that Treasuries were a contributor to volatility rather than a mitigant.

With the era of ultra-low interest rates appearing to be at an end, there is a need for institutional investors to consider how changing correlations within, as well as across, asset classes, may affect investment performance and how to approach this.

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The information on this website is for Institutional Investors only. Specifically, the information on these pages should not be used or relied upon by the public of Hong Kong or any other type of investor from any other jurisdiction.