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How Rising Interest Rates Will Impact My GoWealth Investment? | 1-min read

GoWealth4 Apr 2023
Hong Kong and the US stocks have been very turbulent this year, causing losses to investors. The Fed’s interest rate hikes have resulted in market slumps as at 14 June 2022. Investors are also concerned with the next interest rate increase of 75 basis points, as the Fed announced on 15 June 2022.Net total returns for major indices*
  • Hang Seng Index: -9.4%
  • MSCI World Index: -21.0%
  • MSCI AC Asia ex Japan: -15.9%
  • Bloomberg Global-Aggregate: -10.7%
  • FTSE Asia Broad Bond : -11.9%
  • Bloomberg Global High Yield: -13.5%
Source: Bloomberg, year-to-date net total return as at 14 June 2022Interest rate rise may not be a negative impact on stocksHow should investors manage the downside risk? Interest rate hikes usually have a negative impact on bond performance, as bond prices drop when yields increase. Nonetheless, the future returns may increase after getting through the low interest rate environment. If we look at the past four rate hike cycles, S&P 500 has jumped 15.3% on average from initial hike to last hike. Therefore, rising interest is not necessarily a bad thing for stock markets historically.Three investment strategies under rate hike cycle by AllianzGI
  1. Rate hikes will affect bond prices, especially long-term bonds. Investing in short-term bonds could help to ease the impacts from rising rates.
  2. In the short run, there is still uncertainty in the market with increasing concerns related to economic growth, interest rate rise trend, inflation, geo-political risk etc. Investors should balance the risk and return, and build a resilient investment portfolio.
  3. From the long term investment prospective, a more balanced portfolio with stocks and bonds can provide both potential returns and downside cushioning.
How could GoWealth help you?With reference to the capital market predictions from AllianzGI, GoWealth has accounted for impacts to different investment markets from future rate rise in the recommended investment portfolio1. GoWealth makes good use of short-term bonds in the global fixed income allocation, as to provide protection in volatile markets2.Our GoWealth Digital Wealth Advisory Services and algorithm can assess the returns or loss in short, medium and long term according to your portfolio allocation. It can also project market trends in the next 50 years, which reflects our capital market forecast on various asset classes and the model portfolios in terms of risk, return and correlations1. GoWealth Investment is a medium to long term investment, investors should not over panic on short term fluctuation.If you wish to check you goal details, check out our GoWeath>My TargetFootnote:
  1. The algorithm in the GoWealth Digital Wealth Advisory Services relies on the portfolio simulation database containing 1,000 simulation paths for each model portfolio over the next 50 years (i.e. 600 months), which reflects our capital market forecast on various asset classes and the model portfolios in terms of risk, return and correlations.
  2. Each Model Portfolio corresponds with certain risk profiles and asset classes which consists of a certain number of funds selected by the Bank. The asset allocation of asset classes is determined by AllianzGI and the Bank. The Selected Funds within a certain asset class and their composition in the Model Portfolio will be determined at the Bank’s sole discretion and may vary from time to time.
Important NoticeThis document is for general information only. The information or opinion herein is not to be construed as professional investment advice or any offer, solicitation, recommendation, comment or any guarantee to the purchase or sale of any investment products or services. This document is for general evaluation only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
The information or opinion presented has been developed internally and/or taken from sources (including but not limited to information providers and fund houses) believed to be reliable by WeLab Bank, but WeLab Bank makes no warranties or representation as to the accuracy, correctness, reliabilities or otherwise with respect to such information or opinion, and assume no responsibility for any omissions or errors in the content of this document. WeLab Bank does not take responsibility for nor does WeLab Bank endorse the information or opinion provided by any information provider or fund house.
Past performance is not indicative of future results. WeLab Bank makes no representation or warranty regarding future performance. Any forecast contained herein as to likely future movements in interest rates, foreign exchange rates or market prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in interest rates, foreign exchange rates or market prices or actual future events or occurrences (as the case may be).
You should not make any investment decision purely based on this document. Before making any investment decisions, you should consider your own financial situation, investment objectives and experiences, risk acceptance and ability to understand the nature and risks of the relevant product(s). WeLab Bank accepts no liability for any direct, special, indirect, consequential, incidental damages or other loss or damages of any kind arising from any use of or reliance on the information or opinion herein. You should seek advice from independent financial adviser if needed.
WeLab Bank is an authorised institution under Part IV of the Banking Ordinance and a registered institution under the Securities and Futures Ordinance (CE Number: BOJ558) to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities.Allianz GI is a leading active asset manager. For details, please visit: https://hk.allianzgi.com/ .This document is issued by WeLab Bank. The contents of this document have not been reviewed by the Securities and Futures Commission in Hong Kong.
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