'Right now, many investors are probably patting themselves on the back, having profited from a booming property market and the makings of a resurgent share market.
But there is an elephant in the room – rising bond yields. And they could bring the party to an abrupt end.
Let’s take a quick look at the portfolio of a typical investor. There’ll be some shares for growth, some fixed interest, hybrids or infrastructure stocks for income and some property for diversification.
So which of these are at risk from the rising bond yields we have been warning investors about all year?
The answer is: all of them!
Interest rates act like gravity on the value of assets. The higher the interest rates go, the greater the gravitational impact on asset prices. Irrespective of whether we are talking about bonds, shares, farmland or businesses, all assets are worth less when interest rates rise.
