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Part 2 of 2: Low Rates, Assets Inflate

In the concluding part of this 2-part whitepaper on the low interest rate scenario currently engulfing the world, we consider the long-term consequences of such a protracted low-rate environment on asset prices – in particular on equity prices.

– Andrew Macken, Chris Demasi & Amit Nath

 

While in the whitepaper Part I we considered the likely drivers of low interest rates, explored the case of Japan and the lessons that can be taken from their economy and concluded that there is a strong case for interest rates to be remain structurally lower for a protracted period of time.


In the concluding Part II we consider the consequences of such a protracted low-rate environment on asset prices – in particular on equity prices. The prospect of sustainably low longterm “risk-free rates” of interest has driven required returns down, and boosted prices, in many financial asset classes. Yields on government and corporate bonds, and capitalization rates on real estate, have fallen. The same has not been true for the aggregate equity market…yet.

 

Links to both the papers are shared below:

Part I: Low rates, assets inflate (Whitepaper)

Part II: Low rates, assets inflate (Whitepaper)

Our Montaka Long Only funds strive
to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka Variable Net funds, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark.

Our Montaka Active Extension funds strive for maximised return over the long-term. Owning the Montaka Variable Net long portfolio typically scaled up to approximately 130 percent - and the Montaka Variable Net short portfolio typically scaled down to approximately 30 percent – this these funds results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net funds strive for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this these funds are our flagship long-short.

Our
Funds

Our Funds

Our Montaka Long Only funds strive to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka Variable Net funds, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark.

Our Montaka Active Extension funds strive for maximised return over the long-term. Owning the Montaka Variable Net long portfolio typically scaled up to approximately 130 percent - and the Montaka Variable Net short portfolio typically scaled down to approximately 30 percent – this these funds results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net funds strive for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this these funds are our flagship long-short.