Andrew Allentuck
As 2021 opened, bond yield curves steepened on Jan. 6, U.S. 10-year Treasury yields hit 1% for first time since March of last year. The economy may feel as if it’s beginning a cyclical recovery, but there are several key differences between a recovey and what’s unfolding now.
Ordinary consumer spending has been deferred while ultra-low interest rates have supported purchases of houses and durable goods. The unemployment rate is high (8.6% as of Dec. 31) and consumer debt has soared.
Will bond prices rise, hold or stumble in 2021?
Avery Shenfeld, chief economist with CIBC, said the outlook is grim. “Government bond yields will be low, but they will climb. Reflecting recovery, the yield curve will steepen.” He added that the Bank of Canada is likely to reduce quantitative easing.
Performance review The share price return of 17.0% and the NAV return of 13.5% for the calendar year 2020 marks two consecutive years of good returns for shareholders (+23% in NAV performance over 2019 and 2020) following a lean period in the two years before that. For the six months to 31 December 2020 the NAV return was 6.4%. What most people will find surprising about 2020 is that through a severe global recession, most assets ended up making money. This is hard to reconcile with the lived experience of 2020. Despite the rise in asset prices, the portfolio objective of preserving shareholder capital was thoroughly tested as we experienced the broadest possible range of market and economic environments. We often describe the Ruffer investment approach as all-weather and there was certainly a wide variety of investment weather to deal with.
How stocks, gold, bitcoin and TIPS can hedge rising inflation MarketWatch 1/19/2021
FA CENTER
How can you best hedge your investment portfolio against the possibility of much higher inflation? It’s an important question to ask because inflation expectations are heating up and the trend may continue,
Earlier this month, St. Louis Federal Reserve President James Bullard told reporters that “the quiescence of inflation that has characterized the last decade may not be a good guide for what’s going to happen in 2021, where I would expect more volatile pricing, possibly higher inflation than we’re used to.”
Consider the 10-year breakeven inflation rate, which is what the bond market currently is betting inflation will average over the next decade. It recently rose above 2.0%, for the first time in more than two years. As recently as March 2020, the bond market was betting that inflation over the subsequent 10 years would average just 0.50%.
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Investing for inflation means choosing assets that keep pace with rising prices - here s how to inflation hedge to protect your wealth
Investing for inflation means choosing assets that keep pace with rising prices - here s how to inflation hedge to protect your wealth
Ramsay LewisJan 16, 2021, 05:18 IST
If your money isn t earning a return, inflation will eventually erode its buying power. Certain investments can be inflation hedges though, offering growth or income to beat an inflationary environment.PeopleImages/Getty Images
Inflation (rising prices) lowers the value of cash savings and fixed-income investments.
Investing for inflation involves picking assets that appreciate, are tangible, or pay variable interest.
January 15, 2021
Small cap equities, emerging markets, and bonds are a few themes that are grabbing attention to start the new year. iShares offers an impressive suite of ETFs to check all these boxes and more.
iShares Russell 2000 ETF (IWM): IWM seeks to track the investment results of the Russell 2000® Index, which measures the performance of the small-capitalization sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index. IWM has a relatively low 0.19% expense ratio.