Time for risk-rebalancing as inflation climbs

It used to be so simple: “Cash safe; equities risky”. Bonds were somewhere in between; gilts nearer to cash and high yield corporate bonds closer to equities. Picture it like a child’s seesaw with the cash child sitting on one end, bottom comfortably close to the ground, and equities up in the air, legs akimbo looking slightly nervy. But the current combination of low interest rates, escalating taxes and rising inflation has had a dramatic impact – it is like the class heavyweight clambering on board the high end. Our understanding of general risk in the current environment has theref...