With Wednesday’s CPI report providing as-expected results, investor and advisor confidence is mounting for a September rate cut from the Federal Reserve.
According to the report, the consumer price index increased 0.2% last month. Meanwhile, the year-on-year increase came in at 2.9%, which largely matches what economists were hoping to see.
Investors can see signals from this report that the disinflation trend may remain intact. With inflation moving as expected, the Federal Reserve has even more justification to begin issuing interest rate cuts in September. At this point, the question is less focused on whether rate cuts will occur and more on whether the first cut will be 25 basis points or 50.
“Overall, the report provides more reinforcement that the disinflation trend remains intact. It should provide the FOMC with increased evidence that the upturn in underlying inflation that occurred in 1Q24 was temporary and has reversed course,” David Doyle, Head of Economics at Macquarie, told Reuters. "There is nothing in here that should prevent the Fed from proceeding with a rate cut in September.”
Operating on the assumption that interest rates do get cut in September, now is an excellent time to recalibrate one’s portfolio. There are plenty of different strategies that can work in a rate-cut environment. Of these, a growth strategy can help fortify capital in the long term.
Many investors may turn to small-caps in order to benefit from lower borrowing costs, but this can come with the usual volatility risks that are ever-present in small caps. Instead, plenty of appeal can be found in using a large-cap growth strategy.
Large-Cap Growth and Quality
One such fund is the Natixis Loomis Sayles Focused Growth ETF (LSGR ). This fund is an actively managed ETF that cultivates a robust portfolio of large-cap companies with high-quality business models.
Even though LSGR is a growth-oriented fund, its portfolio consists of reliable large-cap options with standout business models. This includes key performers such as Nvidia, Meta Platforms, and Alphabet, among others.
LSGR’s disciplined portfolio selection process is key to its success. By choosing unique and reputable large-cap companies, the fund gives investors access to ongoing growth. Simultaneously, it mitigates much of the traditional volatility found in a small-cap portfolio.
In a rate-cut environment, LSGR’s active management team could be highly beneficial. The fund’s active managers can help position portfolio exposure and investment to best capture long-term growth opportunities.
By focusing on both quality and growth, LSGR can bolster a portfolio’s large-cap exposure and build gradual value. If the market kicks it into high gear in September, LSGR can help position your portfolio for success and stability in the long term.
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