The Federal Reserve (Fed) has embarked on a policy to raise short-term rates. If bond holders begin to lose principal as rates rise, they may shift out of bonds into stocks. With the Core CPI now rising at more than a 2.5% annualized rate, we expect more investors to wake up to the harsh reality that inflation may be back. Indeed, the PPI of materials (excluding energy) rose significantly for the first nine months of 2016, and tight labor market conditions have caused companies from Walmart and Starbucks to JPMorgan to raise wages for lower level employees by up to or more than 10%. We have been following the nascent rise of inflation for some time and, by keeping the duration short in our fixed income accounts, have avoided some of the suffering during the fourth quarter rout in longer-term issues. Though the Saratoga Investment Quality Bond Portfolio posted a negative return during the quarter, relative performance was solid in a tough environment.
Information contained herein was obtained from recognized statistical services and other sources believed to be reliable and we therefore cannot make any representation as to its completeness or accuracy. Any statements not of a factual nature constitute opinions which are subject to change without notice.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Saratoga Advantage Trust mutual funds. This and other important information about the Saratoga Advantage Trust's funds is contained in the prospectus, which can be obtained by clicking here, or by calling (800) 807-FUND, and which should be read carefully before investing. The Saratoga Advantage Trust's funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC. Saratoga Capital Management, LLC is not affiliated with Northern Lights Distributors, LLC. 1/16 © Saratoga Capital Management, LLC; All Rights Reserved.