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Thoughts on inflation

A question that appears to be on many minds: will inflation return? The JOHCM Global Opportunities team provide their thoughts.

  • Ben Leyland
  • Robert Lancastle
21 Dec 2020
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View PDF   Download PDF  
  • Many commentators are increasingly asking whether we should expect a return to an inflationary environment after decades of declining inflationary pressures. 
  • If inflation does pick up, it will completely change the financial environment to which investors have become accustomed, with important implications for equities and bonds if hyperflation worries take centre stage, as well as posing problems for companies with overextended balance sheets.
  • While we are not loudly proclaiming that inflation is set to soar, it is currently part of our thinking. Hence our priority remains the minority of businesses with genuine pricing power, whether through a clear competitive advantage or explicit inflationlinking e.g. within contracts or regulatory structures, such as utilities and contract caterers.

Disclaimer

For professional investors only. Past performance is no guarantee of future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment. The information contained herein including any expression of opinion is for information purposes only and is given on the understanding that it is not a recommendation. The Fund’s investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.

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