episode: 59

Inflation, Interest Rates & Bond Returns with guest Sooyeon Mirda, CFA

August 15, 2022

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Uncertainty and volatility par for the course

“Market prices contain rich, reliable information about expected returns in the future.”

It’s an interesting time to be an investor. Uncertainty and volatility are par for the course, inflation rates are higher than we’ve seen in decades, and interest rates are increasing.

Today we’re thrilled to be joined by fixed income strategist Sooyeon Mirda of Dimensional Fund Advisors, who has a rare ability to demystify complex subject matter with tremendous clarity. We’ll discuss interest rates, inflation, and great ways Canadian investors can approach the bond market.

Sooyeon Mirda is a graduate of Princeton, Chartered Financial Analyst, and Investment Strategist at Dimensional Fund Advisors. Before joining Dimensional, Sooyeon worked at Goldman Sachs doing portfolio management and research for ultra-high net worth clients.

In this episode, Sooyeon and Keith talk about how fixed income has become the topic du jour, what’s driving the rise in inflation and interest rates, what you need to know about central banks, how current fixed income returns compare to previous decades, why it matters that the markets are forward-thinking, the importance of long-term strategy in investing, why a systematic approach consistently yields better results, and so much more!

Interest rates, inflation, and great ways Canadian investors can approach the bond market. 

  • Introducing Sooyeon Mirda (2:11)
  • Sooyeon’s role as a Fixed Income Strategist at Dimensional Fund Advisors (4:48)
  • What drew Sooyeon to the fixed income world (6:01)
  • Sooyeon’s finance background before joining Dimensional (8:40)
  • Why everyone’s talking about fixed income lately (9:41)
  • What’s driving the rise in inflation (11:39)
  • The role of central banks and their mandates (14:09)
  • What the recent Fed increases mean for investors (16:59)
  • Defining “hawkish” and “dovish” in the context of central banks (21:54)
  • How current fixed income returns compare to previous decades (23:39)
  • Why many people are excited about the near future of the fixed income market (25:19)
  • Understanding inflation breakeven rates (28:29)
  • What it means for investors that the markets are forward thinking (29:50)
  • What central bank rate hikes actually tell us (32:39)
  • The counterintuitive results of Dimensional’s research into the impact of central bank rate changes on bond returns (35:27)
  • Why a long-term strategy is crucial (38:27)
  • The fixed income strategy that works with the efficient market concept (40:26)
  • How Dimensional thinks about expected returns in fixed income (42:33)
  • Why a systematic approach consistently yields better results (45:44)
  • Sooyeon’s key message for investors during this challenging time (47:38)

Meet your hosts

Keith Matthews

Keith Matthews

Partner & Portfolio Manager

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Marcelo Taboada

Marcelo Taboada

Associate Portfolio Manager

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Lawrence Greenberg

Lawrence Greenberg

Associate Portfolio Manager

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Thanks for Listening!

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