From inflation, to the specter of recession, to war, there's no scarcity of risks for investors to worry about right now.
Yet the greatest risk to investors' portfolios may be the risk of overreacting.
International stocks are forecasted to outperform US stocks over the next 20 years.
However, the fragmented state of the global economy may mean that some countries and markets benefit more than others.
While bonds endured a terrible first half of the year as rates on long-term bonds rose starkly, that pain may have created an opening for investors: For the first time in years, bonds are paying decent yields.
Even with higher yields on bonds, income investors may need extra help to stay ahead of inflation. Fidelity's portfolio managers have found potential income diversification in:
- Floating-rate loans
- Real estate investment trusts (REITs)
- Commodity futures and shares of commodity-producing companies
- Treasury Inflation-Protected Securities (TIPS)
Remember that saying, "Be greedy when others are fearful"?
Strategist and market historian Denise Chisholm is currently seeing potential in financials, value, and small caps.
Inflation could remain elevated for some time, even as it eases from recent highs. That said, investors aren't powerless to stop inflation from eating away at their purchasing power.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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As with all your investments through Fidelity, you must make your own determination whether an investment in any particular security or securities is consistent with your investment objectives, risk tolerance, financial situation, and evaluation of the security. Fidelity is not recommending or endorsing this investment by making it available to its customers.
Investing involves risk, including risk of loss.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.
Because of their narrow focus, sector funds tend to be more volatile than funds that diversify across many sectors and companies.
Value stocks can perform differently from other types of stocks, and can continue to be undervalued by the market for long periods of time.
Changes in real estate values or economic conditions can have a positive or negative effect on issuers in the real estate industry.
The commodities industry can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.
Investments in smaller companies may involve greater risks than those in larger, more well known companies.
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