Getting real about Interest Rates and Inflation
With the new year underway, much attention has been centred on the fact that U.S. inflation hasn’t been this high since the early 1980s. In addition, expectations of tighter monetary policy have cast a cloud of uncertainty over equity markets, igniting bouts of volatility.
Despite the uncertain path of inflation and interest rates, analysis by Polen Capital illustrated in this whitepaper failed to find a statistically significant relationship between these two forces and the Polen Capital flagship Focus Growth strategy’s returns over the course of its 33-year historical track record. Data suggests that earnings growth, not economic regimes, is a key determinant of expected returns.
This fact underscores why, at Polen Capital, the investment approach is anchored on the robust long-term earnings growth of companies in the portfolio rather than focused on positioning the strategy for short-term market preferences.
Instead of attempting to predict the direction and magnitude of inflation and interest rates, Polen Capital’s objective is to invest clients’ capital in what they determine as competitively-advantaged businesses capable of thriving under different economic environments.
Find out why Polen Capital believe investing in high-quality, competitively advantaged businesses could be the best defence against macroeconomic headwinds.
Personal Consumption Expenditures (PCE) & U.S. Fed Funds Rates
You can learn more about the track record of the Polen Capital Focus Growth Fund here: The Polen Capital Focus Growth Fund celebrates its 33rd Anniversary
Established in 1979, Polen Capital is a high conviction growth investment manager with offices in the US and UK. Polen has been dedicated to serving investors by providing concentrated portfolios of the highest-quality companies for more than three decades. The firm’s established team manages US$71 billion in total assets and their longest-running flagship investment strategy has delivered on average double digit annual returns for more than 30 years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only 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 independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
