No ‘Easy Button’ With Multifactor ETFs
By Jeff Brown, Contributor | USNews.com | April 2, 2019
AFTER KEEPING short-term interest rates near zero for seven years beginning with the financial crisis, the Federal Reserve hiked rates repeatedly from December 2015 to last December to head off inflation from a strengthening economy. Now it has signaled rates will stay flat through this year, if not longer, and President Donald Trump is lobbying for another rate cut. Investors may be wondering what to do.
Interest rates affect almost all types of investments, pushing bond prices up or down, raising or lowering corporate borrowing costs and the value of earnings, making one asset more desirable compared to others.
But historical trends don’t always recur in real life – or not as quickly or dramatically as investors expect. So many experts caution against major surgery to the long-term portfolio.
“Small investors shouldn’t make major portfolio changes right now,” says Nathan Yates, economics and finance adjunct professor at Southern New Hampshire University’s College of Online and Continuing Education. “It’s a good time to rebalance allocations [to fit the plan], but I don’t recommend significant adjustments.”