Investors should shun fixed income assets for high-yielding equities in areas like emerging markets, in order to beat the inflation trap, according to Distinction Asset Management.
With the CPI likely to hit 4% during the first quarter, the multi-asset manager warns that fixed income assets are set to deliver punishing returns and recommends that investors turn their attention to emerging market consumer stocks. “We are in a very inflationary environment, and central banks are failing to do what they are meant to,” said Distinction fund manager Patrick Armstrong. “With the VAT increase and weakened sterling, we think inflation hitting 4% in Q1 is a very likely possibility.” In December CPI inflation reached an eight-month high of 3.7%, putting yet more pressu...
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