James Carthew: Interest rate rises trigger rotation

High-quality companies

In the run up to the end of 2021 and into the early part of 2022, investors’ attention was focused on the growing threat of interest rate rises as a way of combating inflation.

That triggered a sharp rotation out of growth stocks. In the space of a few weeks, funds that had dominated performance tables for years lost a quarter or a third of their value. Premiums evaporated. Some of this was logical, much was not.  The Russian invasion of Ukraine has compounded the inflation problem. Oil, gas, wheat and a range of metals have soared in price - benefiting non-Russian producers, but straining valuations in countries and stocks dependent on these commodities. Markets have had another lurch down as a result. Where I think these moves are counter-intuitive, is wit...