{"id":85204,"date":"2023-11-16T06:03:24","date_gmt":"2023-11-16T11:03:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/how-investors-are-gearing-up-for-the-end-of-fed-rate-hikes-according-to-mfs-survey\/"},"modified":"2023-11-16T06:03:25","modified_gmt":"2023-11-16T11:03:25","slug":"how-investors-are-gearing-up-for-the-end-of-fed-rate-hikes-according-to-mfs-survey","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=85204","title":{"rendered":"How investors are gearing up for the end of Fed rate hikes, according to MFS survey"},"content":{"rendered":"
\n

Investors gearing up for the Federal Reserve\u2019s rate-hiking campaign to draw to a close have been migrating into beaten-up bonds and \u201cundervalued\u201d stocks in recent months.<\/p>\n

Five months ago, roughly 52% of respondents in the fixed-income market said they were raising the duration in their bond holdings, according to a MFS survey conducted from May 31 to June 5, but released on Wednesday.<\/p>\n

\n

Almost one in three said they planned to boost allocations to U.S. credit in 2024, while about a quarter said they expected to increase in emerging-market debt.<\/p>\n

\u201cClearly, investors have been de-risking over the past six to 12 months,\u201d Jon Barry, managing director, MFS Investment Solutions Group, told MarketWatch in a follow-up call.<\/p>\n

Results of the survey, now in its fourth year, also mark a notable shift in sentiment after an era of low rates, with fixed income finally viewed as \u201cfairly valued,\u201d something \u201cit hasn\u2019t been for a long time.\u201d<\/p>\n

Investing in longer-duration bonds hasn\u2019t been for the faint of heart, with values recently declining by the most in nearly two decades in the wake of some 18 months of Fed interest-rate hikes.<\/p>\n

See:<\/strong> Why a derailed $11 trillion corporate bond market looks ripe for a comeback as U.S. inflation slows<\/p>\n

In the latest bout of volatility, the 10-year
\n BX:TMUBMUSD10Y
\n and 30-year Treasury yields
\n BX:TMUBMUSD30Y
\n surged to about 5% in October, the highest in 16 years. But with their swift retreat to 4.5% and 4.7% yields, several major U.S. bond indexes this week were lifted back into the green for the year, from a total return perspective.<\/p>\n

The closely watched Bloomberg U.S. Aggregate index, which tracks investment-grade U.S. bonds, was on pace for a roughly 0.4% total return on the year through Wednesday, according to FactSet. <\/p>\n

The related $92.5 billion iShares Core U.S. Aggregate Bond ETF
\n AGG
\n was on track for a 0.7% total return in 2023, according to FactSet.<\/p>\n

The latest retreat in bond yields has been pegged to growing optimism around fading inflation pressures and about the U.S. economy potentially avoiding a recession, even if the Fed only modestly cuts rates next year.<\/p>\n

\u201cOn the equity side going forward, they are seeing opportunities in stocks that got a little more beaten down in the past few years,\u201d Barry said.<\/p>\n

The S&P 500 index
\n SPX
\n up 17.5% on the year as of Wednesday, the Nasdaq Composite Index
\n COMP
\n up 35% and the Dow Jones Industrial Average
\n DJIA
\n up 5.7%, according to FactSet.<\/p>\n

Read<\/strong>: S&P 500 close to exiting correction territory as JPMorgan warns risk-reward in stocks appears \u2018unattractive\u2019<\/p>\n

Even with the recent rally, many bond indexes still remain deeply negative when looking at multiyear returns, with the Bloomberg US Treasury (20+Y) index on pace for a negative 39% 3-year total return, according to FactSet data. <\/p>\n

The related $42.7 billion iShares 20+ Year Treasury Bond ETF
\n TLT
\n was down about 7.3% from a return perspective, on the year. <\/p>\n

Back in equities, about 60% of the MFS survey respondents said they expect U.S. small-
\n RUT
\n and mid-cap stocks to outperform large-cap stocks in the next one to three years.<\/p>\n

Roughly 21% said they planned to reduce their large-cap and growth-stock exposure in the next 12 months.<\/p>\n

The MFS survey included 112 individuals representing a range of firms that had from under $1 billion to over $1 trillion in assets under management. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investors gearing up for the Federal Reserve\u2019s rate-hiking campaign to draw to a close have been migrating into beaten-up bonds and \u201cundervalued\u201d stocks in recent months. Five months ago, roughly 52% of respondents in the fixed-income market said they were raising the duration in their bond holdings, according to a MFS survey conducted from May […]<\/p>\n","protected":false},"author":1,"featured_media":85205,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-85204","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nHow investors are gearing up for the end of Fed rate hikes, according to MFS survey | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Investors gearing up for the Federal Reserve\u2019s rate-hiking campaign to draw to a close have been migrating into beaten-up bonds and \u201cundervalued\u201d stocks\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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