Ever darker clouds are gathering on the inflation horizon as a result of the policy of quantitative easing pursued by western central banks. Many investors underestimate just how low actual yield, i.e. yield after allowing for inflation, can be if inflation accelerates. An inflationary environment, accompanied by rising interest rates, quickly results in capital losses, particularly on fixed-interest bonds. A high concentration of this asset class is often found in defensive portfolios. We know how to provide you with the necessary inflation protection, applying broader investment restrictions which enable securities to be held with attributes that develop positively at a time of inflation. These include inflation-protected bonds, floaters (bonds with a variable interest rate), equities and alternative investments.
The underestimated effect of inflation on terminal wealth
Read our contribution in Basler Zeitung of November 3, 2012 (in German only).