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Why the inflation debate is about to get more complicated; Moving on from US equities

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The inflation game

US inflation figures are making headlines again today, but the debate’s about to get more complicated.

The sight of consumer price growth hitting the 5 per cent mark has already set tongues wagging. Asset prices, however, are altogether more relaxed. In keeping with the trends we discussed yesterday, equities continue to climb, and Treasury yields have barely moved.

That in itself speaks to some of the difficulties that lie ahead for portfolio managers. The latest Asset Allocator podcast, released today, discusses this very topic.

Ben Seager-Scott, head of multi-asset funds at Tilney, talks about why – strange as it may sound – it might prove harder to get investors to focus on inflation in the months ahead. You can listen here on Acast, here on Spotify, or here on Apple Podcasts.

The other question mark for allocators is what happens if real rates start responding. A range of asset classes, from equities to inflation linked bonds to gold, do well enough when inflation expectations are rising. But the equation starts to change if and when central banks start to respond. That means the portfolio outcomes might look rather different in the months ahead.

But it’s not just about inflation: the podcast also takes in regional equity allocations and the possibility of diversifying away from the US, as well as the increasingly hot topic of diversity in fund management.

If you’ve made it this far but somehow missed the links above, you can listen here, here or here. And if you like the podcast then please subscribe or follow on your service of choice.

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