Writing for Firstlinks, Munro Partners CIO Nick Griffin says that while there is no doubt it’s a tough time to be investing in growth stocks, by continuing to identify the structural areas of interest, growth fund managers and investors can take advantage of lower prices and be well positioned when the market and interest rates do return to some level of normality.
Global markets have entered a difficult period as fundamentals turn and the spectre of inflation remains on the horizon. As global economies faced myriad difficulties over the past couple of years, governments responded by supporting their economies through various crises with large amounts of debt. That, in turn, has meant the equilibrium level of interest rates has continued to get lower and lower.
But while higher inflation is now driving interest rates back up, it is unlikely they are headed back to where they were previously and ultimately, we are still living in a low-rate world.
Highly indebted governments (and consumers) can not afford rates to reach levels much above 3%. If they do get too high, the risk is that economies will be pushed into recession again.