Here is why investors should not "be worried about Fed" meeting this week

The Federal Reserve is set to convene this week for a two-day meeting that is unlikely to produce a shift in the central bank's posture on monetary policy.

For this reason, some strategists say investors ought not to worry about the Fed hitting stocks at this juncture even as it is in the midst of a tightening cycle.

Morganlander expects three further interest rate hikes, by 0.25 percent each, as well as the beginning of a balance sheet reduction. This could all elevate volatility as well as "financial stress," he said, and investors should be "balanced" in their investment strategy, particularly when it comes to investing in bonds.

And equity investors ought to keep in mind that valuations are somewhat stretched, so a cautious approach would be best over the next six months, he added.

The central bank's meeting, set for this Tuesday and Wednesday, will not be "live" in the sense that "anyone expects a change in the policy of any kind," wrote currency strategists at Brown Brothers Harriman on Monday in a note to clients.

Even still, investors may be worried about what may come of future policy shifts from the Fed. In this month's Bank of America Merrill Lynch global fund manager survey, strategists found that one of investors' biggest concerns is a policy "mistake" from the Fed or the European Central Bank.

Source: Bloomberg Pro Terminal

Jr Trader Ivan Ivanov

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