Investors should rethink traditional asset allocation given the determination of central banks to lift interest rates ever higher to slow inflation.
BlackRock strategists are ditching the 60/40 portfolio in favour of public and private investments as well as tactical holdings of bonds to navigate higher interest rates.
The strategists recommend looking at specific equity sectors, such as energy or healthcare, and selecting companies with robust cash flows and resilient supply chains that can endure a recession.“These old assumptions do not reflect the new regime we’re in – one where major central banks are hiking interest rates into recession to try to bring inflation down,” the strategists said.
The strategists recommend looking at specific equity sectors, such as energy or healthcare, and selecting companies with robust cash flows and resilient supply chains that can endure a recession.“We believe in a new approach to building portfolios” where “strategic views need to be more granular – across sectors and within private markets – to help build more resilient portfolios in the new regime”, they said.
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