Citywire - For Professional Investors

Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

BlackRock’s Rieder: demographics will keep interest rates low ‘for years to come’

BlackRock’s Rieder: demographics will keep interest rates low ‘for years to come’

Investors need to look to emerging markets as demographics across developing markets will keep interest rates low for ‘years to come’, according to BlackRock’s chief investment officer for fixed income Rick Rieder.

Speaking at an Income roundtable on Wednesday, Rieder, the lead manager of BlackRock’s Fixed Income Global Opportunities fund, said: ‘We have a different view than others. We believe that the traditional way of measuring the economy is flawed.’

He added that one of the biggest influences is not monetary policy but demographics.

In the developed world there are fewer people entering the workforce, thus dulling consumption, said Rieder. The decreasing number of workers entering the economy is placing downward pressure on interest rates, particularly in Japan and throughout Europe.

‘We will continue in a lower growth world than we have historically whether monetary policy tries to offset it or not. Inflation is going to organically stay lower than it has historically,’ said Rieder.

‘In Japan and Europe rates will remain low or lower for years to come. The US can start to lift them. Part of this is why you need to diversify your rate exposure.’

The US case

The US is a different story to its counterparts in Europe and Japan, as they are in a position to raise rates, said Rieder.

‘The US economy is at a really strong level. I don’t believe that it’s the best of the worst,’ he said, ‘[However,] interest rates are going to stay low for a long time because we’re in a different world for demand for income and demographics and lower rate of inflation.’

He added that the skeptics that despair over the US economy because of the recent ‘softer numbers’, such as payroll, have to take a step back and think about the context of an economy that is operating quite well in a global economy that is facing difficult demographic headwinds.

As for where to diversify, Rieder mentioned emerging markets, and his co-portfolio manager, Amer Bisat elaborated by saying that Brazil, Indonesia and Argentina, are examples of where they are placing fixed income bets.

Rieder added that in the US, they are investing in non-agency mortgages, and the residential market as it could continue to do well.


Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire Latin America 2017

    Citywire Latin America 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire Santiago 2017

    Citywire Santiago 2017

  • Citywire Mexico 2017

    Citywire Mexico 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015