Rising interest rates, inflation, and asset allocation

15 min read 29 Mar 21

Summary: Please find below an update from the M&G Multi Asset team looking at how they approach asset allocation in an environment when inflation and interest rates could be set to increase.

  • We believe we are at a critical juncture where changes to the interest rate and inflation regime can determine the long-term characteristics of investors’ portfolios.
  • When determining return and correlation patterns across assets, it is just as important to assess the reasons why inflation and interest rates move, as the levels they might reach.
  • Considering a range of potential future interest rate and inflation scenarios is imbedded in the Multi Asset team’s approach to portfolio construction.
By M&G Investments

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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