Video

Real Vision | Hedging the Financial Tsunami of Higher Rates and Inflation

June 10, 2021


Especially in times of crisis, 60/40 and risk parity portfolios are underpinned by the inverse correlation between stocks and bonds. But with rates at the zero bound and the potential for inflation to push rates higher, we may be fast approaching a period where stocks and bonds go down together. Mike Green and Harley Bassman from Simplify discuss why this might be the biggest risk in markets today and the truly innovative ETF products they are constructing to help investors of all levels hedge that risk.

DEFINITIONS

Basis Points (bps): One basis point equals one hundredth of one percent. This is also referred to as bps or "bips".

Beta: The volatility of a security as compared to the market as a whole.

Cash Flow: The net amount of cash and cash equivalents

Duration: A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates

S&P 500: The S&P 500 Index, or the Standard & Poor's 500 Index, is a market-capitalization-weighted index of the 500 largest publicly-traded companies in the U.S.

SX5E Index: A stock index of Eurozone stocks designed by STOXX