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.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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.
simon oaten
:
arguably, the start of the sell-off at the long end has already started ………
useful data for people:
http://www.cnbc.com/bonds-us-treasurys/
rgds
sdo
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?
Roger Montgomery
:
Yes Yiannis
Wayne A
:
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.
Roger Montgomery
:
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.