To guard against stubborn inflation and higher-for-longer interest rates, investors should focus on quality companies with high pricing power and adjust their duration risk in bonds, according to Wall Street strategists and portfolio managers.
Pricing power Companies with high pricing power tend to outperform when inflation is elevated because they have the ability to defend their profit margins by passing along higher costs to their end market customers.
"In equities, you should prefer companies that have pricing power, i.e.
"When inflation is the predominant risk in markets, correlations between stocks and traditional bonds tend to be high.
BlackRock's iShares strategy team recently argued that investors should take advantage of spikes in bond yields while they can and reinvest their cash.
Persons:
Stocks, Brad Conger, Sonu Varghese, Jason Pride, Pride, Rick Rieder
Organizations:
Dow Jones, Treasury, Street, Callaghan, Co, Big Tech, Carson Group, Securities, U.S ., Glenmede Trust
Locations:
Hirtle, BlackRock