Tabula : Institutional investors and wealth managers are planning to invest in strategies which provide a hedge and protection against inflation rising.
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Michael John Lytle CEO of Tabula Investment Management
Inflation linked fixed income ETPs and income bonds set to see big increase in inflows
Institutional investors and wealth managers are planning to invest in strategies which provide a hedge and protection against inflation rising. This is according to new research from European fixed income ETF provider Tabula Investment Management Ltd (“Tabula”) with 100 wealth managers and institutional investors from the UK, France, Germany, Italy and Switzerland, who collectively manage almost US$100billion in assets under management.
Tabula found 95% of wealth managers and institutional investors interviewed are already investing in products that provide some hedge and protection against inflation. Nine out of ten (90%) expect to make changes to their asset allocation to increase inflation protection.
Seven out of ten wealth managers and institutional investors expect to increase their allocation to inflation-linked fixed income ETPs and eight out of ten to inflation-linked fixed income bonds (36% dramatically).
| Asset class | Percentage of professional investors that plan to increase their allocation to primarily provide a hedge against inflation |
| Inflation linked fixed income ETPs | 52% |
| Equities | 48% |
| Inflation linked fixed income bonds | 44% |
| Certain sectors | 34% |
| Gold | 29% |
| Broad commodity basket | 17% |
“The world has experienced 30 years of benign inflation, due primarily to the deflationary effect of China and other emerging countries such as Vietnam and Indonesia entering the global labour market. However, we are beginning to see a reversal of this trend. This, combined with a shift to autarky as nations become increasingly inward looking, is leading some to suggest that the current period of higher inflation may persist” said Tabula CEO Michael John Lytle. “Professional investors have acknowledged this and are taking action to provide some protection against inflation for their portfolios.”
Tabula’s US Enhanced Inflation UCITS ETF is the only ETF in the market that provides exposure to both expected and realised US inflation in a single ETF. It does this by combining exposure to a US TIPS portfolio with exposure to US inflation expectations (10-year breakevens). With c. US$100 million in assets under management, the ETF is attracting growing interest from institutional investors and wealth managers across Europe. The fund is listed across major European exchanges.
When it comes to ETFs that combine exposure to a broad portfolio of US inflation-linked bonds (TIPS) and also act as an efficient tool to capture US inflation expectations, 47% of professional investors surveyed said such products are ‘very attractive’ in the current environment, and 51% described them as ‘quite attractive’.
Source : ETFWorld.co.uk
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