On Sept. 12, the European Central Bank announced that, for the second time in three months, it was cutting its key interest rate. While the move was not altogether unexpected, it did reinforce the belief that the U.S. Federal Reserve would soon embark on a similar program of rate cuts. World financial markets now widely expect the Fed to announce a cut of at least 25 basis points at its next meeting on Sept. 18.
Almost all industrial sectors will benefit from rate cuts to one extent or another, but some sectors and some asset classes do particularly well in falling interest rate environments. In other words, the rate cuts on the horizon call for a new and different approach to asset allocation and security selection.
Here’s how to invest and what to invest in when rates are dropping.
This post originally appeared at U.S. News & World Report.