New research from European ETF provider Tabula Investment Management reveals that over 90 per cent of European institutional investors and wealth managers surveyed are concerned about inflation.
Some 88 per cent of the professional investors interviewed have, in the last six months, increased their allocation to assets and investment products that aim to provide a hedge against inflation. The survey captured the views of investors who collectively manage in excess of USD300 billion in assets under management.
Almost 85 per cent of those surveyed said they expect the funds they manage to increase allocations to asset classes and funds which help combat the threat of inflation, with 20 per cent stating this allocation will increase dramatically.
In terms of which asset classes they will increase their allocation to, 71 per cent highlighted inflation-linked fixed income ETPs, Tabula says.
“Inflation is one of the biggest threats facing investors. It is not surprising to see so many professional investors taking positive steps to tackle the challenge. The issue is that although current inflation is high, long term inflation expectations are still range bound. If investors conclude that inflation is here to stay, then the landscape could change dramatically,” says Michael John Lytle, CEO of Tabula Investment Management.
“There is deep concern that we are entering a new era of persistently higher inflation,” says Tabula CIO Jason Smith. “Trade freedom is in decline, while ‘greenflation’ and the Ukraine conflict are driving energy prices and food input costs higher. Central banks are rising to the challenge, but the question is whether monetary policy can tame inflation caused by stark supply-demand imbalances.”