Will 2011 be a Happy New Year ?
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The Office of National Statistics has announced December’s CPI figure as 3.7% which is far too close to 4% for comfort. Retail price inflation is already close to 5% and still rising, having a disastrous impact for all deposit savers living on their interest. The consequence of the rise in VAT, coupled with energy and food price increases, is bound to feed through to further inflationary pressures in the system, meaning that the Governor of the BOE will be writing many more letters in the months ahead! Equally, inflation is increasing in emerging markets that are driving the global recovery, such as The key question for all investors is how this will manifest itself in the |
Commodities are one obvious option, Asia Pacific another. Commercial property has also been touted as a potential inflation hedge, but I prefer infrastructure, as the Chinese continue to build ports, airports and roads to support their booming economy and the developed countries like the US replace ageing energy pipelines. For those looking for a developed market option, then the US and mainstream Europe could be considered, as these markets have been marked down in 2010 and any reversal in growth fortunes could see them gain substantially. In today’s changing economic climate, accessing these markets through a global equity fund could prove a sensible move, as this provides greater geographical flexibility. In the UK the benefit will come from companies with strong balance sheets and high margins, as this provides both protection against increased inflationary costs and the opportunity of growth from increased mergers and acquisitions activity. I have selected one of my favourite funds in five sectors for consideration in 2011, all of which feature in the Thomas Heald portfolios. |
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