The negative effects of higher bond prices on investment

Investors should conduct a risk-tolerance assessment to see if they can tolerate an increase in the weight of stocks in their portfolios, according to Helen Paradise. (Photo: 123RF)

Country The rise in long-term bond prices has strained stock markets over the past few weeks.

Hélène Paradis, vice president and investment advisor at TD Wealth Management, says that in such an environment, investors need to assess their risk tolerance to see if they can withstand the increased weight of stocks in their portfolios.

According to her, this should reduce the effect of negative returns on the “fixed income” portion of the portfolios.

Markets are also concerned about a possible rise in inflation. In this aspect, Ms. Paradis recalls that in 25 years, the United States has not experienced sustained inflation above 2%. On the one hand, over the next few months, we will see a sharp rise in inflation, among other things because the numbers will be compared to those of the worst months of the 2020 pandemic.

Hélène Paradis takes a very positive view of the Federal Reserve announcement, on Wednesday, which predicts an increase in US GDP of 6.5% in 2021 and believes that Canadian investors should benefit from the recent rally in the Canadian dollar. To diversify their portfolios south of the border.

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