After months of inflation concerns, your clients may have found comfort in July 2022’s monthly inflation figures, along with lower gas prices they are seeing at the pump. Even though the pace of inflation slowed in July, the annual inflation rate remains 8.5% — close to a multi-decade high.
The fact is, inflation, rising interest rates, and a potential for recession, remain very much on people’s minds, and may be a source of anxiety for clients concerned about the potential impact on their portfolios and their financial futures.
Clients may find themselves asking:
- How exposed am I to inflation and rising interest rates?
- How can I make my portfolio more inflation-proof?
While these questions may provoke anxiety, they can also provide an important opportunity for you as an advisor to demonstrate your unique value by helping clients navigate challenging times.
Your most important tools: good information and good client service.
As clients look for ways to protect their portfolios, you can help them understand that managing a portfolio during inflation creates challenges, but options exist. The things you can do include helping clients understand their current position and helping them diversify by exploring new investment options on the long-term horizon while navigating new market conditions.
Where have people turned to for opportunities in past inflationary periods?
Companies that offer products consumers tend to buy regardless of economic conditions or personal financial situation may weather ups and downs better than other stocks. These include food and beverage, household goods, toiletries, and other staples.
During the stagflation era or the late 1970s to early 80s, investors turned to high-quality dividend stocks focused on long-term performance.
Stocks from companies in less high-profile industries may be undervalued relative to their worth, pay dividends, and offer modest growth.
Commodities prices are an important part of inflation and are generally sensitive to economic growth and inflation.
Cash may be an important consideration for clients at or near retirement.
Short-term bond funds
While longer-term bonds are more sensitive to interest-rate movements, shorter-term bonds may be more attractive during periods of inflation.
Understanding investment options and how they might work for your clients is part of what you offer as an advisor. Whether you are researching new investment opportunities or considering how to rebalance portfolios using existing investments, data is important to helping you make decisions.
FundVisualizer is a powerful research tool that can help you by offering key data on more than 30,0000 mutual funds, including ETFs and indexes.
Explore options for diversification
Because market conditions may require you to think about diversification in new ways, you can turn to FundVisualizer’s Explore feature to consider the universe of options available. Search by fund name or Morningstar category to identify top-performing funds, then explore performance or other criteria, and add funds for comparison.
Create and compare portfolios
Use FundVisualizer to create and compare portfolios or research the returns of different allocation models across a variety of historical market conditions.
FundVisualizer also makes it easy to create shareholder-approved reports that you can email directly to clients. These reports help keep clients up-to-date on options and recommendations, and demonstrate the service and value you provide as their advisor.
Putnam Retail Management.