60 seconds with Johanna Kyrklund on QE "fatigue"
Record low interest rates and huge bond buying programs have been in place for the best part of a decade, but is the impact of quantitative easing (QE) on markets subsiding?
29 March 2016
In recent years markets have been dominated by two key trends:
- Extensive QE by the major Western central banks which has inflated the prices of many assets.
- The more cyclically-exposed areas of markets languishing because global growth has not been strong enough to sustain their performance.
To some extent we are suffering from QE fatigue. Recently, for example, the Bank of Japan moved to negative interest rates. Consequently, the market rallied for a couple of days, but went straight back down again.
We reduced risk in our multi-asset portfolios last year because we think that some of the beneficiaries of QE are looking quite tired.
However, we are starting to see relative value in some of the more cyclical areas of the market, such as high yield debt, value stocks and emerging market currencies.
- Johanna Kyrklund
- Quantitative Easing
Important Information: The views and opinions contained herein are those of Schroders’ Investment team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. UK: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA, is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. Further information about Schroders can be found at www.schroders.com US: Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc, a SEC registered investment adviser and is registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan providing asset management products and services to clients in Canada. 875 Third Avenue, New York, NY, 10022, (212) 641-3800. www.schroders.com/us