20 Apr 10 Stocks And ETFs To Own In A Negative Interest Rate Environment
John Carter is founder of Simpler Trading and author of the best-selling book Mastering the Trade. His third Forbes column, and his first as an official “contributor” to Forbes, discuss the negative interest rate environment we may be seeing in the U.S. by 2017. John also discusses what could be beneficial investing strategies in that scenario if the market continues its upward trend, or it reverses. Excerpt:
Now that the first quarter of 2016 has ended, the rest of the year is coming into sharper focus. While stocks continue what seems like an almost unshakeable uptrend, there are signals that portend a volatile and unique road ahead.
Currently, more than $7 trillion of government bonds around the world offer yields below zero. Investors buying these bonds and holding to maturity won’t get all of their money back. While most banks have been reluctant to pass on negative rates for fear of losing customers, a few have begun to charge large depositors. This is a dangerous trend.
While not as exciting as holding a high-flying technology stock, the utilities sector yields an average of 3.7%, well above the S&P 500, and, of course, very attractive in an environment where interest rates are poised to go negative. I like PPL Corp (PPL) here as they have a high yield and are aggressively expanding while at the same time raising the rates they are charging clients. I also like the largest electric power company, Duke Energy (DUK) which sells electricity to over seven million customers and pays a dividend over 4%. For a broader reach, try the Utilities Select Sector SPDR (XLU) which is also incredibly liquid.
See the full story in Forbes: The Top 10 Stocks And ETFs To Own In A Negative Interest Rate Environment || See all of John Carter’s Forbes stories