There’s a good deal of fear in the current environment about rising interest rates. BlackRock provides us with some nice perspective though. It shows a few of the recent rising interest rate environments. Two things really stand out here: 1) bonds haven’t performed all that poorly in absolute terms during rising rate environments. And 2) stocks are a substantial hedge against rising interest rates. Here’s a bit more from BlackRock:
Most investors fear rising interest rates. But perhaps more than the others, bond investors fear the loss of portfolio value that may occur when interest rates rise. Which begs the question – are there alternatives to bonds that might offer income and behave better in a rising rate environment? Indeed, global dividend stocks offer a compelling potential of income and outperformance in rising rate environments.