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Alternative Market Briefing

Trend followers may get a bump if interest rates rise

Friday, June 28, 2013

Bailey McCann, Opalesque New York:

Welton Investment Company is out with a new paper that compares asset class performance against interest rate regimes. The paper specifically provides some insight into what investors might consider if interest rates start to creep back up. Many investors have come to realize that they are heavily reliant on investments that only thrive during favorable interest rate conditions, if all that changes equities alone might not be enough.

The paper itself looks at a variety of performance factors compared against both rising and declining interest rate regimes in an effort to assess performance as well as the common components of a managed futures strategy. "I think if you're trying to look at how best to allocate, most people would be surprised that equities have offered, at best moderately positive performance in historical rising interest rate environments," explains Nash Dykes, of Welton and author of the paper in an interview with Opalesque. "On the other hand, systematic strategies applied to commodities have tended to perform quite well in these periods."

The paper looks at interest rates between 1970-2012 following the recent major market events and the shift from a rising rate environment in the early 1970s, to the persistent decline rates have been on......................

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