Sean O’Hara, President of Pacer ETF Distributors, joined Keith Black, Managing Director of RIA Channel, to discuss the impact of a higher-for-longer interest rate regime on equity investment styles.
Investors face threats from geopolitical risks and the fact that higher rates and inflation haven’t yet materially impacted corporate profits. Higher rates can threaten growth stocks by applying higher discount rates to earnings in distant future years, reducing the present value of those cash flows. Companies with high current free cash flow have the resources to deal better with higher levels of interest rates.
