New research from European ETF provider Tabula Investment Management Limited (‘Tabula’) reveals that over 90% of European institutional investors and wealth managers surveyed are concerned about inflation.
88% of the professional investors interviewed have, in the last six months, increased their allocation to assets and investment products that aim to provide a hedge against inflation. The survey captured the views of investors who collectively manage in excess of US$300 billion in assets under management.
Almost 85% of those surveyed said they expect the funds they manage to increase allocations to asset classes and funds which help combat the threat of inflation, with 20% stating this allocation will increase dramatically.
In terms of which asset classes they will increase their allocation to, 71% highlighted inflation-linked fixed income ETPs.
Table 1: How will your allocation to asset classes that combat the threat of inflation change in the coming months?
|Asset class||Increase dramatically||Increase slightly|
|Broad commodity basket||21%||46%|
|Inflation-linked fixed income ETPs||27%||44%|
|Inflation-linked fixed income bonds||16%||50%|
“Inflation is one of the biggest threats facing investors. It is not surprising to see so many professional investors taking positive steps to tackle the challenge. The issue is that although current inflation is high, long term inflation expectations are still range bound. If investors conclude that inflation is here to stay, then the landscape could change dramatically”.Michael John Lytle, CEO of Tabula Investment Management.
“There is deep concern that we are entering a new era of persistently higher inflation,” added Tabula CIO Jason Smith: “Trade freedom is in decline, while ‘greenflation’ and the Ukraine conflict are driving energy prices and food input costs higher. Central banks are rising to the challenge, but the question is whether monetary policy can tame inflation caused by stark supply-demand imbalances.”
The Tabula US Enhanced Inflation UCITS ETF is the only ETF in the market that provides exposure to both realised and expected US inflation. It has ~US$60 million in assets under management and trades actively on the London Stock Exchange (USD: TINF LN; GBP-hedged: TING LN), Xetra (EUR-hedged: TABI GY), Borsa Italiana (EUR-hedged: TINE IM) and SIX Swiss Exchange (CHF-hedged: TINC SE).