VanEck CEO Jan van Eck advises investors to adjust their portfolios in light of the recent interest rate cut. He suggests focusing on small-cap companies and exploring fixed income investments, while acknowledging potential challenges posed by the federal deficit.
on Wednesday marked the first time in more than four years it moved to lower the benchmark interest rate. According to VanEck CEO Jan van Eck, investors should start thinking about how the changing macro environment will affect their investments in the year ahead.
"Investors should look at their equity book and say, 'How should I construct that to ride through the cycle of the next year?'" he told CNBC's""We're going to be in an easing cycle, so small-cap companies are going to be benefited by lower interest rates," the firm's chief ETF strategist said. But it's not just equity strategies that experts suggest revisiting. Investors may begin to cut back their cash holdings, too. While the average return on the 100 largest money market funds still sits above 5%, according to"Fixed income is this area that is just seeing a tremendous amount of flows right now because of the rate environment, and that likely will continue," he said.
With rates finally beginning to fall, van Eck points to the federal deficit as the next potential challenge for markets. He sees reason to stick with some popular portfolio hedges amid broader repositioning. "Can the government continue to stimulate the economy and spend so much more than they're taking in in tax receipts? Our answer is that's going to cause a lot of uncertainty.
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