PT - JOURNAL ARTICLE AU - Gerald Garvey AU - Konark Saxena TI - Should the Interest Rate Level Influence Asset Allocation? AID - 10.3905/joi.2018.1.069 DP - 2018 May 10 TA - The Journal of Investing PG - joi.2018.1.069 4099 - https://pm-research.com/content/early/2018/05/09/joi.2018.1.069.short 4100 - https://pm-research.com/content/early/2018/05/09/joi.2018.1.069.full AB - How does the interest rate environment inform the allocation between risky and safe assets? The authors focus on the level rather than change in rates because rates are highly persistent; changes are infrequent and unpredictable while low versus high rate regimes are durable. US history from 1926-2016 shows that equities have lower risk and higher excess returns when rates are low. Despite all the concern about low yield, a low rates environment is actually a good thing for more aggressive investors.