Investment Strategy for ETFs Amid Interest Rate Cut Expectations
Ahead of the anticipated interest rate cuts by the U.S. Federal Reserve, experts on Wall Street are recommending investments in preferred stock ETFs. In an economic environment marked by ongoing uncertainties, preferred stocks and dividend stocks are expected to benefit particularly from gradual rate cuts. The 'iShares Preferred & Income Securities' (PFF) ETF, which offers high dividend yields, has seen a 5.5% increase in its price this year, indicating a positive performance. Additionally, U.S. Money Market Fund (MMF) assets have reached record highs, showing abundant liquidity.
Meanwhile, shortly after the Chuseok holiday, the U.S. Federal Reserve is likely to cut interest rates by 0.25 percentage points, and the Bank of Japan (BOJ) will hold its monetary policy meeting soon. Researcher Lee Kyung-min from Daishin Securities noted the need for the Fed to adjust the gap between its policies and market expectations. Concerns are rising over unwinding yen carry trades following hawkish statements from the BOJ, with a critical exchange rate threshold set at 140 yen per dollar. The KOSPI has declined by 6.25% over seven consecutive trading days, mainly due to significant foreign investor sell-offs. While sentiment towards AI semiconductor investments has slightly uplifted the market, the outlook for large semiconductor stocks and the overall Korean stock market remains bleak.
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Mr. Kim regularly receives dollar allowances… Where is this place attracting large sums of money? - Maeil Business NewspaperU.S. economic uncertainties remain, including the presidential election. Investment waiting funds with nowhere to go are flocking to MMF, reaching an all-time high of $6.3 trillion. The allure of high dividends and stable returns stands out. Wall Street says, 'Investing at the beginning of a rate cut is advantageous.'