Trustnet Magazine 71 March 2021 - Page 30

Enormous amounts of fiscal and monetary easing have not only distorted markets , but investors ’ time horizons , writes Pádraig Floyd
Your portfolio
30 / 31
Enormous amounts of fiscal and monetary easing have not only distorted markets , but investors ’ time horizons , writes Pádraig Floyd

Easing riders

Quantitative easing ( QE ) may have saved our bacon when the pandemic hit , but it comes at a cost . It pushes down interest rates , depressing yields on government bonds and other “ safer ” financial instruments . Because these are the mainstay of pension funds and insurance companies , it forces investors to look elsewhere for returns , inflating asset prices . Despite the economic havoc wreaked by the Covid-19 pandemic , equity markets did well in 2020 . The MSCI World index rose by 13.48 per cent , driven by the S & P 500 , which made 17.75 per cent . Elsewhere , while the DAX only just edged into positive

TRUSTNET