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Investors: watch out if long bond rates kick up

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Investors: watch out if long bond rates kick up

Arguably the greatest risk to investors today is an under appreciation of how significant a change in bond interest rates will be. And these rates can change even if central banks don’t raise their own short-term offerings. So discussions about what the US Federal Reserve bank does with the fed funds rate, or the Reserve Bank of Australia through its own open market operations, aren’t particularly helpful.

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Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merill Lynch.

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This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564) and may contain general financial advice that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking advice from a financial advisor if necessary.

5 Comments

  1. Yiannis Dimitriou
    :

    Thanks for sharing the insight Roger. In the article you refer to US figures. I take it you are implying that a change in US bond rates will have repercussions in Australian bond and equity values?

  2. Roger, you have previously suggested some ways to provide at least some protection against this via your long/short funds and so on. In a recent newspaper article you mentioned an account which protected against a arise in bond yields (or along those lines). Are you able to elaborate on this? Thanks.

    • If you share the view long bond yields will eventually rise, then you may want to consider getting in touch with a large retail brokerage to see whether they can offer something that works for you.

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