Citi Global Wealth PUTTiNG YoUr CASH To worK iN A HiGHer rATe eNviroNMeNT | | 32 Investments The US Federal Reserve’s interest rate hikes FiGUre 2. HiGHer rATeS, BUT NoT For MoNeY MArKeT STrATeGieS in 2022 were the fastest in its history. This proved painful for many assets, but particularly 6.0 for growth equities and longer term bonds. Fed funds rate (upper target) However, the resulting higher interest rate US Money Market Fund rate environment has left certain yields looking 5.0 2yr US Treasury yield attractive once more. As FIGURE 2 shows, though, these are not to be found in money market funds. 4.0 When it comes to certain US dollar-denominated bonds, however, it’s a different story. Yields ) on a range of assets have risen to levels not % ( seen in some years. And with the interest rate 3.0 te hiking cycle perhaps nearing completion and Ra inflation set to retreat in 2023, we see potential for Pursuing portfolio income with short- and 2.0 intermediate-term bonds. We also favor dividend growth equities, those with a track record of growing shareholder 1.0 payouts throughout economic cycles. Over time, these consistent dividend equities have outperformed their more dynamic 0.0 “growth” counterparts, rather like the tortoise '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 beating the hare – see Why dividend grower “tortoises” may be core holdings. Source: Haver Analytics, as of 22 Oct 2022. All forecasts are expressions of opinion, are subject to change without notice and are not intended to For suitable investors, we see potential for be a guarantee of future events. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes seeking to turn equity market volatility into a only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which source of income – see Why capital markets are would lower performance. Past performance is no guarantee of future results. Real results may vary. more important than ever. Likewise, we set out the case for various private market strategies – see Alternative investments may enhance cash yields. Higher interest rates have reshaped the investment landscape. Do not assume you will get security from holding excess cash. Rather, this is a time for putting liquid resources to work.