Hard to find assets that do well during rate hikes, but diversification can reduce risk: report

IT has historically been hard to identify assets that have performed well during interest rate hike cycles, with US and UK asset returns over the last century depressed when interest rates are rising, said a report published on Thursday (Feb 24).

But the authors of the Credit Suisse Global Investment Returns Yearbook 2022 note that diversification can still help investors reduce risks, even though asset correlations may spike during times of crises.

The report, published by the Credit Suisse Research Institute in collaboration with London Business School, was authored by Professor Elroy Dimson, Professor Paul Marsh and Dr Mike Staunton.