The ASX 200 share this fund manager singles out amid rising interest rates

Companies that rely on the share market to fund their future growth could be facing some hurdles as interest rates and bond yield move higher.

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When you think of S&P/ASX 200 Index (ASX: XJO) shares to buy in today’s era of rising interest rates, growth shares might not be the first to spring to mind.

That’s because most ASX shares falling into the growth category have suffered some hefty losses in 2022.

What’s been happening with ASX 200 shares in 2022?

The sell-off began early in the year as investors cottoned on to the reality that fast-rising inflation figures weren’t so transitory after all. And that rock bottom interest rates, forecast to remain in the basement until 2024, would in fact begin ratcheting higher this year to rein in that inflation.

As investors repositioned their portfolios, that pressured many ASX 200 shares, with the index slipping 6.3% year-to-date.

As a metric for growth shares, we can compare that to S&P/ASX All Technology Index (ASX: XTX), which has dropped 32.2% this calendar year.

So, with growth shares under heavy pressure, are there any ASX 200 shares in that category that look promising amid rising rates?

Mature growth stocks in the spotlight

Certainly, according to Ben Clark, portfolio manager at TMS Capital, who told Livewire that he’s been buying “quite a few” growth stocks recently.

Chief among those that Clark singled out is Seek Limited (ASX: SEK), which owns and operates Australia’s dominant online job advertising website.

Addressing the lingering uncertainty as to the scale of pending interest rate hikes and rising bond yields, Clark said:

To me the safe area at the moment, just while you’re trying to assess where bond yields do top out or where the terminal interest rate plays to, is probably the more mature growth stocks that you want to look at.

One of the vital things to look for in ASX 200 growth shares, he said, is “a lot of certainty around the earnings”.

“Seek might be a business that I’d single out there and the multiple compression isn’t going to be too violent from this stage,” he said.

As for which ASX 200 shares you may wish to avoid for now?

“You still want to avoid businesses that need the share market to fund their future growth,” Clark advised. “That is not where you want to be at the moment.”

Seek share price snapshot

The Seek share price has underperformed the average of all the ASX 200 shares in 2022, falling 28.5%. That compares to the year-to-date loss of 6.3% posted by the ASX 200.

Seek pays a 1.7% trailing dividend yield, fully franked.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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