Finding value in a world of rising inflation and interest rates
Ask the Investment Team, January 2017
As the extended period of low rates and inflation gradually begins to ease, we invited veteran bond investor Ian Spreadbury of Fidelity International to join us on our monthly Ask the Investment Team call to consider the challenges ahead. Also on the call from Coutts were Alan Higgins, Head of Portfolio Management and Construction and Alistair Jex, Senior Portfolio Manager.
As ever it was a lively and stimulating discussion covering a lot of ground in a short time. Subjects discussed included:
- Which areas of the bond markets look appealing – and which to avoid
- Opportunities for equity investors in today’s highly valued markets
- The prospects for a recovery in sterling
The main points from the discussion are summarised below.
Don’t miss out on our next Ask the Investment Team Call. In February, we’ll be considering the world of real estate following the launch of our latest quarterly Real Estate Perspective. Watch out for your invitation, or contact your private banker to secure your chance to ask our investment experts about the property market in 2017.
Alistair Jex: In the near term we think that the under-performance of sterling will last for a little while yet. What we have done in our portfolios where we’ve seen gains made in international markets, is to start switching some of those funds to sterling. Recently, for example, we switched share classes in a European fund from a euro-based, pure European exposed version into a sterling-hedged version, locking in some of those currency gains. So we’re trying to capture the performance of those assets but eliminate the currency risk from here.