Why the inflation outlook matters

THE news media is awash with concerns about inflation. Why does it matter for investors?

There are 2 main reasons: First, different inflation scenarios typically lead to very different outcomes for equity markets. Second, developed market government bonds significantly lose their status as safe-havens in a diversified investment allocation if inflation remains elevated.

Therefore, in a high inflation scenario, investors will need to consider other ways to diversify their exposure to equities, with alternatives such as gold, commodities, private credit and private real estate assets.