RICHMOND, Va. - Trendline Research & Management Corp. executives believe stock prices will continue to rise and interest rates will continue to decline, according to a new report.
Their optimism about the markets and no-load funds in particular is based on a belief that the Federal Reserve will lower rates well into 1996 as the economy struggles to shake off the lingering effects of the rate increases implemented during 1994.
Officials at Trendline, a manager of managers using mutual funds, also believe Treasury Secretary Robert Rubin purposefully timed the dollar's decline in 1994 and early 1995 to orchestrate a dollar rally during the presidential election year.
"The disinflationary effects of a stronger dollar in the coming months should provide the Federal Reserve with plenty of room to lower rates in 1996," the report said.
Also, the expected decline in interest rates, coupled with an upsurge in savings by baby boomers, should add to the flow of money into mutual funds.
Trendline is allocating 65% to equity growth funds and 35% to fixed-income funds on behalf of clients.
The firm expects most general purpose mutual funds to gain 15% and some selected funds to post gains in excess of 30% between now and November 1996.
