5 Best Investments During High Interest Rates

In this article, we discuss 5 best investments during high interest rates. If you want to read our detailed discussion on the stock market outlook and the industries benefiting the most due to high interest rates, head over to 10 Best Investments During High Interest Rates.

5. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 81

Walmart Inc. (NYSE:WMT) is a giant in global retail, wholesale, and related operations. On August 17, Walmart Inc. (NYSE:WMT) reported a Q2 non-GAAP EPS of $1.84, beating Wall Street estimates by $0.13. The revenue of $161.63 billion went up by 5.9% year-on-year, also exceeding market consensus by $2.35 billion. In August, Walmart Inc. (NYSE:WMT) reported that its customers were experiencing the impacts of rising inflation, prompting shifts in their shopping behaviors. Doug McMillon, the company’s CEO, noted that Walmart Inc. (NYSE:WMT) was adapting to this new reality, according to The New York Times. This makes Walmart Inc. (NYSE:WMT) one of the top picks for investment options during high interest rates.

According to Insider Monkey’s second quarter database, 81 hedge funds were bullish on Walmart Inc. (NYSE:WMT), as compared to 91 in the prior quarter. D E Shaw is the largest stakeholder of the company, with 5.4 million shares worth approximately $862 million. 

Here is what Leaven Partners has to say about Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6% from 7.2% in early August and slashing full-year profit growth to 4.5%.”

4. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 90

Bank of America Corporation (NYSE:BAC) offers a wide range of banking and financial solutions to individuals, small and medium-sized enterprises, institutional investors, major corporations, and governments on a global scale. On July 18, Bank of America Corporation (NYSE:BAC) reported a Q2 GAAP EPS of $0.88, beating Wall Street estimates by $0.05. The revenue of $25.2 billion increased by 2.9% year-over-year, surpassing market expectations by $260 million. Bank of America Corporation (NYSE:BAC)’s earnings increased in the first quarter due to higher income generated from interest payments by customers, a result of the Federal Reserve’s actions in raising borrowing rates. In addition to the above-mentioned revenue numbers, the bank also continued to work toward achieving a goal it set earlier this year – reducing its workforce through natural attrition. Alastair Borthwick, the bank’s chief financial officer said, “That sets us up for a good trajectory on expense going forward,” according to The New York Times. Bank of America Corporation (NYSE:BAC) is one of the best investments during high interest rates. 

According to Insider Monkey’s second quarter database, 90 hedge funds were bullish on Bank of America Corporation (NYSE:BAC), compared to 91 in the prior quarter. Warren Buffett’s Berkshire Hathaway is the top stakeholder of the firm, with close to 1.03 billion shares worth approximately $29.6 billion.

Oakmark Equity and Income Fund made the following comment about Bank of America Corporation (NYSE:BAC) in its second quarter 2023 investor letter:

“Two financial industry companies led the six-month detractors’ list, however. Charles Schwab and Bank of America Corporation (NYSE:BAC) both reported material mark-to-market unrealized losses in their marketable securities holdings, an outcome of the increase in interest rates early in the year.”

3. Berkshire Hathaway Inc. (NYSE:BRK.A)

Number of Hedge Fund Holders: 109

Berkshire Hathaway Inc. (NYSE:BRK.A) is a diversified multinational conglomerate holding firm based in Omaha, Nebraska. Its main business and primary source of funds come from the insurance sector. It channels the capital generated through insurance into a diverse array of subsidiaries, equity investments, and various securities. Berkshire Hathaway Inc. (NYSE:BRK.A) maintains resilience in the face of high interest rates due to its diversified portfolio of businesses and investments spanning various industries.

According to Insider Monkey’s second quarter database, 109 hedge funds were bullish on Berkshire Hathaway Inc. (NYSE:BRK.A), as compared to 108 in the prior quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with more than 25 million shares worth $8.5 billion. 

2. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 106

JPMorgan Chase & Co. (NYSE:JPM) functions as a global financial services corporation that is organized into four main segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. On September 19, JPMorgan Chase & Co. (NYSE:JPM) declared a $1.05 per share quarterly dividend, a 5% increase from its prior dividend of $1.00. The dividend is distributable on October 31, to shareholders of record on October 6. Jamie Dimon, Chief Executive Officer at JPMorgan Chase & Co. (NYSE:JPM) said, “The US economy continues to be resilient. Almost all of our lines of business saw continued growth in the quarter.” The rise in profits was primarily attributed to an increase in net interest income. It is one of the best investments during high interest rates. 

According to Insider Monkey’s second quarter database, 106 hedge funds were bullish on JPMorgan Chase & Co. (NYSE:JPM), compared to 112 in the last quarter. 

Madison Sustainable Equity Fund made the following comment about JPMorgan Chase & Co. (NYSE:JPM) in its second quarter 2023 investor letter:

“JPMorgan Chase & Co. (NYSE:JPM) has rebounded nicely following the mini-bank crisis in March. They held an analyst meeting in May at which they gave updated guidance on net interest income. They expect net interest income to increase to $84 billion from its forecast of $81 billion as First Republic assets will get a nice boost from rising interest rates.”

1. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 171

Visa Inc. (NYSE:V) functions as a global payments technology corporation. The company manages VisaNet, a transaction processing network facilitating the authorization, clearing, and settlement of payment transactions across the globe. On July 25, Visa Inc. (NYSE:V) declared a quarterly dividend of $0.45 per share, in line with previous. The dividend was distributed on September 1, to shareholders of record on August 11. Visa Inc. (NYSE:V) announced stronger-than-expected growth in card spending, exceeding Wall Street’s expectations. It is one of the best investments to consider during high interest rates. 

According to Insider Monkey’s second quarter database, 171 hedge funds were bullish on Visa Inc. (NYSE:V), two down from the last quarter. Chris Hohn’s TCI Fund Management is the top stakeholder of the firm, with close to 17.8 million shares valued at $4.2 billion.

Baron FinTech Fund made the following comment about Visa Inc. (NYSE:V) in its second quarter 2023 investor letter:

“We modestly trimmed Visa Inc. (NYSE:V), Mastercard Incorporated, and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo, Visa announced its intention to acquire the Brazilian company for $1 billion in late June.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 10 Best Aluminum and Aluminum Mining Stocks To Buy and 12 Best Global ETFs to Buy.