How to invest in the new era of falling interest rates

Oct 03, 2019, 03:11 PM
Interest rates are being cut again around the world but investors would be foolish to think that the trade that has made them money in the past five to ten years will continue unchecked.

That is the warning of Tom Becket, chief investment officer at Psigma Investment Management, who says investors should beware the overcrowded strategy of holding low yielding government bonds and high growth US shares.

The US Federal Reserve has cut interest rates and the European Central Bank has followed and restarted quantitative easing, meanwhile expectations in the UK are now for the base rate to fall rather than rise.

Yet the new world of falling rates will not be the same as the post-financial crisis one, where a wave of cheap money provided a rising tide that lifted all boats, argues Becket.

Instead, he says that investors may consider looking to the world’s unloved assets, including Japanese shares, certain emerging markets, Europe’s better companies and UK companies beaten up by the Brexit storms.

He joins Simon Lambert and Richard Hunter on the latest Investing Show to explain why he thinks the mood music has changed for the cheerleaders of globalisation and how investors can prepare themselves to protect their wealth and profit in the years ahead.