Talking Point 

Inflation sparks theme for Isa season

Inflation sparks theme for Isa season

Inflation-proofing should be on the table when it comes to choosing Isa investments this season, Adrian Lowcock has suggested.

The investment director for multi-manager Architas, said inflation proofing should be something advisers consider for their clients over the coming months.

He explained: "Investors haven’t had to worry about inflation for a long while. But in 2017 inflation has returned with the Bank of England forecasting inflation will reach 2 per cent in February this year and peak at 2.8 per cent by 2018."

According to Mr Lowcock, the return of inflation is widely expected by the market as the recovery in the oil price and the fall in the pound following the EU referendum are likely to drive prices higher.

While the inflation estimates are nowhere near the giddy heights of the 1970s; indeed not even as high as they were in 2011, Mr Lowcock warned that investors should consider this as a factor when they come to make their investment decisions in their stocks and shares Isas.

He commented: "As such traditional inflation proofing assets such as index linked gilts, have already priced in much of the anticipated rise in inflation.

"Alternative income assets, such as infrastructure, tends to respond more slowly as investors look to these sectors last."

The comments came as advisers taking part in a Talking Point poll for FTAdviser said they were also looking to diversify their clients' portfolios into inflation-hedging asset classes.

Among those surveyed, 35 per cent said they were heading to equities, with clients accepting a little more risk for the sake of potentially inflation-beating returns.

In close contention was property investment (both residential and commercial) as a means to outpace inflation.

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