Portfolio and inflation

iro

What features would a portfolio held by a UK resident have in order to be protected against inflation?

In this case the inflation risk is assumed to be mostly UK specific?

Any ideas?

Linton

1) Funds holding shares in solid companies which sell things people need to buy. Eg supermarkets, food manufacturers, utilities. Inflation means that the prices of basic goods go up. The income and the profits of such companies tend to rise with inflation. So you would expect the share prices and dividends also to increase with inflation.

2) major global companies. If inflation is UK specific you would expect the value of the £ to decrease compared with other currencies. So holding companies priced on the basis of doing business in anything other than £s to increase in £value.

3) Government backed index linked bonds. Unfortunately none are available at par at the moment.

Alexland

Linton wrote: »

3) Government backed index linked bonds. Unfortunately none are available at par at the moment.

Yes these sound great in principle if they weren't as inflated and interest rate sensitive as normal bonds and gilts.

iro

A broad portfolio of shares in other currencies than sterling, exposure to private equity and emerging markets on any weakness.

Not keen on utilities if the cause/incidence of inflation is the election of Corbyn.

Index linked not really much to do with inflation anymore, nominal bonds represent a real risk in an inflationary environment perhaps some exposure to US Treasuries with a buying opportunity at the long end as rates rise and the curve inverts.

The FOMC really the only credible monetary authority.