Extending Duration Tends to Pay Off Before Fed Rate Cuts
With the Fed nearing the end of its current hiking cycle, investors may benefit from extending duration in their bond portfolios as rate cuts may soon follow.
Average REIT Returns 12 Months After Past Four Rate Hike Cycles Ended
Source: Morningstar. Average returns 12 months following the end of each of the past four Fed rate hike cycles (end dates used: 2/1/1995, 5/16/2000, 6/29/2006, 12/20/2018). REITs represented by the FTSE NAREIT All REIT Index, which is designed to track REIT performance in the commercial real estate space across the U.S. economy. Past performance does not guarantee future results.
CHART HIGHLIGHTS
- Rising interest rates have kept pressure on REITs, but signs now suggest that the Federal Reserve's rate hiking cycle is near its end.
- REITs delivered double-digit returns in the 12-month periods following the completion of the past four rate hiking cycles.
More Spotlight On The Markets
Markets Tend to Rally When Rate Hike Cycles End
It may be an opportune time for investors to add to both their fixed income and equity allocations.
Bond funds tend to outperform CDs after peak rates
Investors may benefit from extending duration and broadening sector exposures prior to the end of the Federal Reserve hiking cycle.
Footnotes
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