Loans remain a compelling option for investors seeking inflation and rate hike protection – but higher interest rates, which have historically led to slowed economic growth, means careful credit selection will be critical to help sidestep more vulnerable segments of the market.

Central banks must temper inflation at a time of geopolitical crisis, historically high valuations, slowing economic growth, declining equity markets, and a flattening yield curve. Quality growth stocks, relative winners during past periods of persistent inflation, can be a portfolio stabilizer in challenging times.

Securitized debt, often overlooked as an inflation hedge, may be an attractive solution for investors who want to diversify away from assets susceptible to inflation and rate risk.

“The Federal Reserve today has not become hostile. Rather, they are more like a frustrated parent at the end of the day, not fully exhibiting their typical parental affection.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners

“In 2021, the S&P 500® Index recorded one of its highest risk-adjusted returns in several decades. While risk is always present in the capital markets, in 2022 it may reshape itself in defense of elevated volatility, monetary tightening, and inflationary pressures that challenge the resiliency of consumer spending and corporate profit margins.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners

Inflation has become a greater threat to portfolios than it was in the previous decade. Here’s a look at potential ways investors can hedge against such risk.

“Exposure to the strong consumer and the strong corporate climate are critically important opportunities for today’s investors.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners