{"id":10162,"date":"2022-10-28T12:42:40","date_gmt":"2022-10-28T17:42:40","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=10162"},"modified":"2022-10-28T12:42:47","modified_gmt":"2022-10-28T17:42:47","slug":"how-to-protect-portfolios-against-inflation","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/how-to-protect-portfolios-against-inflation\/","title":{"rendered":"How to Protect Portfolios against Inflation"},"content":{"rendered":"\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul style=\"list-style-type: square;\">\n<li><em><strong><a href=\"#portfolio-protection-badly-needed\">Portfolio Protection Badly Needed<\/a><\/strong><\/em><\/li>\n<li><em><strong><a href=\"#high-demand-for-financial-advice\">High Demand for Financial Advice<\/a><\/strong><\/em><\/li>\n<li><em><strong><a href=\"#interest-rate-hikes-and-inflation\">Interest-Rate Hikes and Inflation<\/a><\/strong><\/em><\/li>\n<li><em><strong><a href=\"#a-new-investment-environment\">A New Investment Environment<\/a><\/strong><\/em><\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<h2><a id=\"portfolio-protection-badly-needed\"><\/a>Portfolio Protection Badly Needed<strong>\u00a0<\/strong><\/h2>\n<p>As inflation continues to rise, financial advisors are expected to provide clients with more confidence and\u00a0<a href=\"https:\/\/www.investmentnews.com\/as-rate-hikes-slow-mortgage-refinancing-etf-rides-to-a-27-gain-since-january-226339\">portfolio protection<\/a>.<\/p>\n<p>Today inflation has become a major concern for most investors.<\/p>\n<p><a href=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Today-inflation-has-become-a-major-concern-for-most-investors.jpg\" data-rel=\"lightbox-image-0\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10163 \" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Today-inflation-has-become-a-major-concern-for-most-investors-750x330.jpg\" alt=\"\" width=\"468\" height=\"206\" \/><\/a><\/p>\n<p>\u00a0<\/p>\n<p>The most common questions for advisors today are about the best time to invest and ways of protecting portfolios from inflation.<\/p>\n<p>Most clients have faith in their advisors during this period of tumult; but any financial professional worth his salt, knows that there are choppy waters ahead.<\/p>\n<p>\u00a0<\/p>\n<h2><a id=\"high-demand-for-financial-advice\"><\/a>High Demand for Financial Advice<\/h2>\n<p>Anyone talking to a financial advisor, will discuss inflation. For example, how inflation will impact their investment goals in both the short and long-term.<\/p>\n<p><a href=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/short-and-long-term.png\" data-rel=\"lightbox-image-1\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10164 \" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/short-and-long-term.png\" alt=\"\" width=\"525\" height=\"231\" \/><\/a><\/p>\n<p>\u00a0<\/p>\n<p>Unsurprisingly, most investors believe that it is prudent to work with a financial advisor. There is, however, a generational divide to contend with, when it comes to seeking and paying for advice.<\/p>\n<p>Gen X investors are the least likely to work with an advisor in today\u2019s turbulent times. Not all of them agree that it is better to seek professional advice.<\/p>\n<p>The most common reasons Gen X investors \u2014 those born between 1965 and 1980 \u2014 are reluctant to work with an advisor are the following: they prefer to have full control over their investment decisions, and they don\u2019t always trust that financial advisors have their best interests at heart.<\/p>\n<p>Gen Xers are the most concerned about rising inflation. However, a potential wrench in the spokes, for this way of thinking, is that they are not adequately prepared for retirement and need to reassess their investment strategy.<\/p>\n<p>Even though the members of Gen X have generally distinguished themselves as <a href=\"https:\/\/rixtrema.com\/blog\/online-trading\/\">DIY investors<\/a>, the financial planning industry could still step up and fill the void by catering to this segment of consumers.<\/p>\n<p>The financial services industry actually pays more attention to baby boomers than to Gen Xers because that\u2019s where the wealth is, and there\u2019s also a special focus on millennials through robos and digital advice. But Gen X has been potentially overlooked, over the years, despite wealth and substantial financial responsibility.<\/p>\n<p>\u00a0<\/p>\n<h2><a id=\"interest-rate-hikes-and-inflation\"><\/a>Interest-Rate Hikes and Inflation<\/h2>\n<p>Under pressure from central bankers determined to control inflation, even at the cost of a recession,<a href=\"https:\/\/www.investmentnews.com\/global-bonds-set-for-worst-ever-month-before-burst-of-rate-hikes-220727\">\u00a0global bonds<\/a>\u00a0slumped to their first bear market in a generation.<\/p>\n<p>The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds has fallen more than 20% from its 2021 peak on an unhedged basis, the biggest drawdown since its inception in 1990. Officials from the U.S. to Europe have hammered home the importance of tighter monetary policy in recent days, building on the hawkish message from Federal Reserve Chair Jerome Powell at the\u00a0<a href=\"https:\/\/www.federalreserve.gov\/newsevents\/speech\/powell20220826a.htm\">Jackson Hole symposium<\/a>.<\/p>\n<p>Rapid\u00a0<a href=\"https:\/\/www.investmentnews.com\/powell-warns-rates-will-stay-high-for-some-time-225798\">interest-rate hikes<\/a>\u00a0deployed by policy makers in response to soaring inflation have brought to an end a four-decade bull market in bonds. That\u2019s creating a difficult environment for investors, with bonds and stocks sinking in tandem.<\/p>\n<p>\u00a0<\/p>\n<p><a href=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/tandem.png\" data-rel=\"lightbox-image-2\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter  wp-image-10165\" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/tandem-750x330.png\" alt=\"\" width=\"573\" height=\"252\" \/><\/a><\/p>\n<p>\u00a0<\/p>\n<p>Investment consultants believe that the secular bull market in bonds, that started in the mid-1980s, is coming to an end. Yields, on the other hand, aren\u2019t going to return to the historic lows seen both before and during the pandemic.<\/p>\n<p>The high levels of inflation the world now faces mean central banks won\u2019t be prepared to reintroduce the sort of extreme stimulus that helped send Treasury yields below 1%.<\/p>\n<p>On a hedged basis, the bond index fell as much as 12% from its peak. The simultaneous swoons for fixed-income and equity assets are undermining a mainstay of investing strategies over the past 40 years or more. MSCI Inc.\u2019s index of global stocks has slumped 19% this year.<\/p>\n<p>That has pushed a U.S. measure of the classic\u00a0<a href=\"https:\/\/www.investmentnews.com\/is-this-the-death-of-60-40-224283\">60\/40 portfolio<\/a>\u00a0\u2014 where investments are split by those proportions between stocks and bonds \u2014 down 15% this year, on track for the worst annual performance since 2008.<\/p>\n<p>\u00a0<\/p>\n<h2><a id=\"a-new-investment-environment\"><\/a>A New Investment Environment<\/h2>\n<p>Investment strategists agree that we are in <a href=\"https:\/\/rixtrema.com\/blog\/covid-has-impacted-82-of-americas-retirement-plans\/\">a new investment environment<\/a>, and this is a huge deal for those expecting fixed income to be a diversifier to risk off in equities.<\/p>\n<p>European bonds have been hit hardest this year as natural gas prices have gone soaring. That includes the U.K.: a Bloomberg index tracking investment grade sterling bonds also fell into a bear market.<\/p>\n<p>The yield spread between sterling and dollar-denominated corporate bonds is the widest since 2014, reflecting the particularly acute pressures in the U.K. where the highest inflation for 40 years is fueling a cost-of-living crisis.<\/p>\n<p>Asian markets have suffered less, aided by China\u2019s debt, as the Central bank there eases policy to try and turn around the world\u2019s second-largest economy. Investment-grade dollar bond spreads narrowed last month by the most since 2020, driving them tighter than those of U.S. peers, something that\u2019s happened only a few times in the last decade.<\/p>\n<p>The switch in much of the world from unprecedented easing to the steepest rate hikes since the 1980s has dried up liquidity, according to JPMorgan Chase &amp; Co.<\/p>\n<p><a href=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Strategists.png\" data-rel=\"lightbox-image-3\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10166 \" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Strategists.png\" alt=\"\" width=\"405\" height=\"461\" srcset=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Strategists.png 648w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Strategists-263x300.png 263w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/Strategists-500x569.png 500w\" sizes=\"auto, (max-width: 405px) 100vw, 405px\" \/><\/a><\/p>\n<p>Strategists assume that bond and currency markets have seen more severe and more persistent deterioration in liquidity conditions this year relative to other asset classes with little signs of reversal. Bearish bond momentum is approaching extreme levels.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><em>At RiXtrema, we provide financial advisors with the software for prospecting plans nationwide. Our tools integrate qualified plan data taken from 5500 filings and diverse open sources, letting you reach out to plan executives with targeted marketing materials. We comply with fiduciary regulations, and can measure the risk of every client\u2019s portfolio. You can find us at <\/em><em><a href=\"https:\/\/rixtrema.com\/\">rixtrema.com<\/a>.<\/em><em> Sign up for a <a href=\"https:\/\/rixtrema.com\/requestdemo\/TM?source=blog281022\" target=\"_blank\" rel=\"noopener\">free demo<\/a> TODAY!<\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The most common questions for advisors today are about the best time to invest and ways of protecting portfolios from inflation.<br \/>\nMost clients have faith in their advisors during this period of tumult; but any financial professional worth his salt, knows that there are choppy waters ahead.<\/p>\n","protected":false},"author":25,"featured_media":10167,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[239,168],"tags":[7,25,30],"class_list":["post-10162","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","category-news","tag-financial-advisor","tag-portfolio-stress-testing","tag-stress-testing"],"jetpack_featured_media_url":"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/How-to-Protect-Portfolios-against-Inflation.jpg","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v15.9.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Protect Portfolios against Inflation<\/title>\n<meta name=\"description\" content=\"The most common questions for advisors today are about the best time to invest and ways of protecting portfolios from inflation.Most clients have faith in their advisors during this period of tumult; but any financial professional worth his salt, knows that there are choppy waters ahead.\" \/>\n<link rel=\"canonical\" href=\"https:\/\/rixtrema.com\/blog\/how-to-protect-portfolios-against-inflation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Protect Portfolios against Inflation\" \/>\n<meta property=\"og:description\" content=\"The most common questions for advisors today are about the best time to invest and ways of protecting portfolios from inflation.Most clients have faith in their advisors during this period of tumult; but any financial professional worth his salt, knows that there are choppy waters ahead.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/rixtrema.com\/blog\/how-to-protect-portfolios-against-inflation\/\" \/>\n<meta property=\"og:site_name\" content=\"RiXtrema.com\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LarkspurRiXtrema\/\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-28T17:42:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-10-28T17:42:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2022\/10\/How-to-Protect-Portfolios-against-Inflation.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1800\" \/>\n\t<meta property=\"og:image:height\" content=\"1029\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@RiXtrema\" \/>\n<meta name=\"twitter:site\" content=\"@RiXtrema\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\">\n\t<meta name=\"twitter:data1\" content=\"5 minutes\">\n<!-- \/ Yoast SEO Premium plugin. -->","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/10162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/comments?post=10162"}],"version-history":[{"count":2,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/10162\/revisions"}],"predecessor-version":[{"id":10169,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/10162\/revisions\/10169"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/media\/10167"}],"wp:attachment":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/media?parent=10162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/categories?post=10162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/tags?post=10162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}