Managers Look Ahead To Era Of Rate Declines (Investor's Business Daily)

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Investor's Business Daily
Managers Look Ahead To Era Of Rate Declines
Friday October 6, 7:00 pm ET
Murray Coleman

Nobody knows how long it'll take for interest rates to fall.
But a new study by Standard & Poor's has some advisers planning ahead. They're looking at exchange traded funds that might prosper if the Fed decides to lower short-term rates.

"The interim period while we're not raising or lowering rates is a time to build ETF watch lists," said John Kvale, a Dallas-based adviser. "If it's a soft landing for the economy, then our belief is that we'll gravitate much more toward higher-quality stock funds."

He's moving clients away from small-cap ETFs. The funds he favors now include S&P 500 tracker SPDRs (AMEX:SPY - News). "We're holding off right now on investing in more sector-specific ETFs," Kvale said.

If past trends hold, investors should start seeing rates drop in seven months. At least that's the finding of S&P, which looked at eight rate plateaus since 1974.

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