Adapting equity portfolios to a regime of higher higher inflation

Amundi
By October 13, 2021 08:49

Adapting equity portfolios to a regime of  higher higher inflation

The return of inflation is clearly one of the top themes of 2021 and the post-pandemic economic revival. In addition to the temporary effects associated with supply chain bottlenecks (semiconductors, energy, copper, etc.) during a sudden upturn, there is the question of a potential change in the inflation regime. The alignment of monetary and tax policies around the world points to a potential ‘last battle’ to ward off the deflation risks of the previous decade and, in doing so, encourage higher inflation. The ambition of this study is to look at how to adapt equity portfolios in this scenario.

This structural rise in inflation, if confirmed, harkens back to the period in modern history that spanned the end of World War II to the early 1980s. In reality, we can distinguish between two sub-periods. We have set them apart by naming them after the seasons of spring (1949- 1966) and summer (1966-1982). Each season has strong characteristics, and inflation happens to be one of them.  

Amundi
By October 13, 2021 08:49

SEARCH