I am interning at a investment fund with around $2B AUM. I seek out the reddit forums for an answer that our fund has been looking for. We have been studying the correlation of the return of the 10yr treasury and the return of the SP500 in the presence of inflation. From 1980-2000, when inflation was relatively high, the 10yr treasury and the SP500 provided returns with a positive correlation. From 2000 to present, where inflation was lower, the 10yr treasury and the SP500 have had a negative correlation of returns. This means investors were able to use the 10yr as a hedge for their portfolio, providing safety if their equity holdings experienced a drawdown. My question to you all is, what caused the change in the correlation? Was it the switch from periods of higher inflation to lower? How should one use this info to prepare for the coming years, in terms of adding treasury protection to your portfolio, if inflation is expected to rise?
Submitted January 28, 2021 at 03:42PM by Interesting_Buy_9162 https://ift.tt/3owID97
