The Pulse

Investors Show a Bearish Trend

Nearly one in three experienced investors believe a Fed rate increase would hurt their portfolio

August 05, 2015 06:28am Eastern Daylight Time NEW YORK–(BUSINESS WIRE)–E*TRADE Financial Corporation (NASDAQ:ETFC) today announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors.

Results show investors have grown increasingly more negative toward the market, with bearish sentiment the highest it has been all year.

A significant portion of the population also has a negative view on Federal Reserve rate increases, where nearly one in three experienced investors believe a rate hike would hurt their portfolio. “Retail investors and industry experts agree that a rate increase within the next year is extremely likely,” said Michael Loewengart, VP, Investment Strategy at E*TRADE Financial.

“Investors may wish to review their portfolios now, before interest rates rise, to help ensure their holdings are effectively positioned.”

Mr. Loewengart offered the following general insights for investors concerned about Fed rate hikes:

  • Ladders may help
    A bond-laddering strategy is a mix of short, intermediate, and long-term bonds, which may help reduce interest-rate risk in a rising interest rate environment. With this strategy, an investor creates a portfolio of fixed income with different maturities in an effort to provide consistent income and price stability as rates rise.
  • There may be opportunities outside of bonds
    Bonds are not the only asset class affected by rate hikes. Investors may also consider exploring stocks in industries and sectors likely to benefit from rising rates, such as industrials, financials, and real estate.
  • Diversify, diversify, diversify
    As with any portfolio, diversification remains a key ingredient for success. Diversifying across markets and within asset classes may reduce a portfolio’s sensitivity to rate hikes.


Referenced Data

When it comes to the current market are you?

                      Q314      Q414      Q115     Q215      Q315
Bullish              65%        59%       66%       59%      56%
Bearish            35%         41%      34%       41%       44%

nearly one in three experienced investors believe a rate hike would hurt their portfolio

If the Federal Reserve were to raise interest rates, how, if at all, would it affect your portfolio?
Higher interest rates would…
(Question included only in the Q315 wave of the study)       
Have a negative impact on my portfolio                     32%
Have a positive impact on my portfolio                       17%
Have no impact on my portfolio                                  35%
I don't know                                                                16%


For the full report and infographic of the Q315 StreetWise study results, click here.




About E*TRADE Financial E*TRADE Financial and its subsidiaries provide financial services, including online brokerage and banking products and services to retail customers. Specific business segments include Trading and Investing and Balance Sheet Management. Securities products and services, including stocks, bonds, mutual funds, options, and ETFs are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Managed Account Solutions are offered through E*TRADE Capital Management, LLC, an investment adviser registered with the Securities and Exchange Commission. Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries and affiliates. More information is available at ETFC-G 
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