Just about every financial-related channel I watch is focused on the relationship between the iShares 20+ Year Treasury Bond (Nasdaq: TLT) and tech stocks.
But the problem with all of this information is that it isn’t based on statistical data.
I’m not saying there isn’t a correlation between interest rates and tech… However, it’s not as clear cut as it sounds. I mean, the devil is in the details! And when it comes to the stock market, that statement couldn’t be more true.
Rising rates are usually negative for the market. But in the current economic cycle, it’s rather positive.
That’s why I did some screening to help us find the best stocks for rising interest rates…
The 2 Best Stocks for Rising Interest Rates
One of the best stocks for rising interest rates is iShares Expanded Tech-Software Sector ETF (BATS: IGV).
The IGV tracks the investment results of an index composed of North American equities in the software sector.
It’s one-year return is about 32%… But when I looked at its holdings, I was happy to see that Salesforce, Microsoft, Adobe and Oracle made up about 25% of this ETF. These are solid companies, folks!
Now, these assets should do well even if rates start to move higher in the near term.
But also keep in mind that software companies have very little supply chain bottlenecks. Their products are mostly delivered via the internet, so there’s no reliance on shippers or freight.
With more and more people switching over to subscription models and software needs for work, there’s a great chance these companies will continue to gain strength even if inflation becomes a bigger issue within the broader economy.
Check out my short video below to see the best stocks for rising interest rates.
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