Text on screen: View From the Investment Committee, Guarding Against Inflationary Risks
Ribbon Graphic ID: DANIEL J. IVASCYN, Group Chief Investment Officer
Ivascyn: Inflation protection from a longer-term perspective still makes a lot of sense across portfolios. Breakeven inflation rates have gone up over the course of the last several months. Commodity prices have risen. But when you step back and look at commodities, look at precious metals, look at real estate even from a longer-term historical perspective, valuations still look reasonable, especially on a forward basis. So we do think that it makes sense in an investor’s portfolio. Our base case is that ultimately over the course of the next two years or so, the inflation problems will likely dissipate. Very fat tails to the distribution, and if inflation were to continue to surprise to the upside, that tends to be a quite negative scenario for overall financial market performance. So we do think a lot of those areas of the market that although they’ve done well recently, and from a shorter-term perspective were a little bit more cautious, and given how strong these reflationary traits have done, from a longer-term perspective, we think it makes a lot of sense in a client portfolio. There’s a lot of room to customize to the particular needs of our end clients as well as it relates to inflation protection in a diversified portfolio.
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Please note that the following contains the opinions of the manager as of the date noted and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.
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