"So I am not prepared to give them my clients money to do the job I am paid to do. I think that over the next 12-18 months inflation will normalise, and actually now is not a bad entry point for investing in bonds.”
A key consideration, says Shaniel Ramjee, senior investment manager at Pictet Asset Management, is whether inflation remains higher over the longer term or falls back towards the 2 per cent central bank target as the impact of the events referenced by Balmer dissipates.
He says if inflation does remain higher, this will likely mean increased levels of volatility, and place a greater focus on asset allocation.
He feels that “passively” allocating to certain asset classes would, in those circumstances, leave clients exposed to that much higher volatility, which would not be appropriate for a client with a cautious risk profile.
Ramjee says asset allocation needs to be more nimble and tactical in those circumstances.
david.thorpe@ft.com
