Real assets can offer protection against inflation


Investing in real assets can offer clients protection against much higher inflation, according to the guests on the latest edition of the FTAdviser podcast.

David Coombs, multi-asset fund manager at Rathones, said: “If you are one of the people, and I am not but there are many that do, that thinks we may soon have above average inflation, then some real assets do offer protection.

"Lots of commercial property for example would have rents that are inflation linked, there would be a cap so it wouldn’t offer protection against hyper-inflation.

"Gold doesn’t offer protection against above average inflation, but does offer protection against hyper-inflation and against deflation. And infrastructure assets usually have income that is inflation linked as well.” 

David Conlon, who runs the GCP Asset Backed fund, said about 40 per cent of the assets he manages have income streams linked to inflation, and that the inflation outlook is something he looks at “pretty closely.” 

He said infrastructure and renewable energy assets are examples of this, with returns directly linked to inflation.  

To listen to the full podcast, click on the link above. FTAdviser's podcasts are also available on Acast and are available to download on iTunes and Spotify.