The below article is a good short discussion on the factors to consider when interest rate expectations enters the news cycle (again, or each time it does).
The effect of interest rates on bonds is an inverse one – meaning – when interest rates go up, bond prices go down, and vice versa. Interest rates may affect the stock market too – but those interactions are much more nuanced and difficult to predict because many other factors also affect stock markets too.
Moral of the story: Rather than fret about what to do …. set up a prudent strategy, structure, process and allocation to support those. If this is done properly to begin with, you should have already addressed what to do when things change – and the most likely response should already be part of what you’ve already set up. Otherwise, you’re just flapping in the wind with each gust and change.
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In the interest of disclosure: I do use DFA sub-managed SA Funds with most clients (not a fund requirement, but a business decision I’ve made for clients). This blog is not a solicitation; simply an explanation.