Funds that Will Profit from a Rate Rise

The direction of interest rates is probably the single most important factor investors need to take account of today. At some point rates will have to go up to combat inflation

Charles Stanley 21 November, 2013 | 4:19PM
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Equity and bond markets have thrived on low interest rates and quantitative easing, but they can’t last forever. At some point rates will have to go up to combat inflation – but when?

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Ben Yearsley discusses the interest rate conundrum.

I have believed for some time that we are in an extended era of low interest rates. Despite the comments of the Governor of the Bank of England, Mark Carney, last week that recovery in the UK is taking hold, and that unemployment could fall below its 7% target by the end of next year, I believe he will remain cautious about putting up rates too soon. To do so would increase borrowing costs for businesses and home owners and potentially jeopardise what is so far a fragile recovery. It still looks likely that rates will remain on hold until after the 2015 general election.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Finsbury Growth & Income Ord886.00 GBP0.00Rating
Murray International Ord1,112.03 GBP0.55Rating
Threadneedle UK Equity Alpha Inc Rtl Inc0.67 GBP0.51Rating

About Author

Charles Stanley  Share dealing on UK and international Stock Exchanges. Stockbrokers: advisory and discretionary portfolio management.