Wealth Adviser Newsletter 25.02.22

Troubling times and rising inflation

Our feature this week from Harriet O’Brien details the views of a number of wealth managers on how to deal with rising inflation with most predicting that the number will rise to 7.25 per cent or even 7.5 per cent over coming weeks. Deepbridge Capital’s managing partner Ian Warwick is particularly concerned for SMEs, commenting: "The latest inflation figures combined with recent interest rate hikes, could strangulate the cash reserves of early-stage businesses", while Quilter’s head of retirement policy, Jon Greer, highlights the real-term loss in state pensions. For retirees who rely solely on the state pension the reduction in the real value of their payments "will hit them hard especially against a backdrop of rising food and energy prices," he says.
Our commentator this week is Steven Tredget, Partner at Oakley Capital, who writes that private equity is becoming harder to ignore. "Business owners are remaining private for longer, often looking for alternatives to listing on the stock exchange and the onerous reporting requirements that come with being a plc," Tredget writes.
"Many instead are choosing to partner with private equity firms, who have plenty of capital to deploy as institutional investors looking for strong returns pour more money into this growing asset class. Investment bank Morgan Stanley estimates so-called private capital, encompassing private equity, debt and infrastructure, expanded to USD7 trillion in 2020 and will almost double by 2025."
Nick Wood, head of fund research at Quilter Cheviot, turned his attention to the booming sector of thematic investing, warning that all might not be quite as upbeat as it seems. Entitled ‘Erratic thematics’, Wood’s note says that while thematic investing has clearly become more popular in recent years, he believes investors should tread very carefully as it is an easy area to get things wrong, particularly in an environment where growth stocks are struggling.
"Many thematic funds will naturally be more growth biased and may have overlapping holdings," Wood says. "With value having taken the lead from a style perspective, I suspect there are far fewer thematic funds performing well in that environment."
Beverly Chandler, managing editor, Wealth Adviser

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