Research Affiliates examines how the Federal Reserve’s eventual tapering of quantitative easing could reshape returns across major asset classes. It argues that rising yields need not hurt every risky asset equally, challenging the assumption that tapering is universally bearish while highlighting meaningful differences across global markets and sectors.
The Impact of Tapering on Risky Assets
Research Affiliates
Jason Hsu
Article
1 Pages
Key Takeaways
Yield Sensitivity Matters: U.S. REITs and emerging market equities historically showed greater vulnerability to rising Treasury yields than several other equity categories during prior rate increases.
Not All Assets: Not All Assets: Historical analysis across 11 major asset classes suggests tapering effects vary widely, making broad market assumptions potentially misleading.
History Offers Context: History Offers Context: Using evidence from multiple prior periods of rising interest rates, the paper argues market outcomes depend more on valuation and fundamentals than Fed policy alone.
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