How to hedge against a downturn?

JP Morgan
Door mei 20, 2019 11:46

How to hedge against a downturn?

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This is close to being the longest economic expansion on record. Nobody knows exactly when it will end, so it’s worth considering what investments could rise in value when equities and other risk assets fall during the next downturn. By including some hedges, investors can create a more balanced portfolio and help reduce overall portfolio losses when the next economic downturn eventually arrives.

Traditionally, investors turn to government bonds to balance the riskier assets in a portfolio. However, government bond yields in the UK are very low by historical standards. Having barely raised interest rates since the financial crisis, the Bank of England (BoE) has very limited room to cut interest rates.

Furthermore, the current political landscape complicates the outlook for UK government bonds (Gilts). In the event of a relatively soft Brexit deal being reached, the BoE would be likely to raise interest rates at a faster pace than

JP Morgan
Door mei 20, 2019 11:46

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