XxX | Feature Contents Editorial


INFLATION: WHAT HAPPENS NEXT?


The last time UK inflation was anywhere near the 5.4% recorded in December, John Major was prime minister, cinema goers queued up to watch Basic Instinct and Shake- speare’s Sister topped the charts with Stay.


It feels a little like 1992, but investors may not be feeling nostalgic. Inflation is rising across the world as energy prices are increasing and demand for goods is picking up as we move out of the pandemic, and it could be eroding the value of pension scheme assets. Indeed, one consultant estimates that £20bn has already been wiped off corpo- rate balance sheets in the UK as pension scheme valuations have been hit by rising prices.


The question is, how much further could the cost of goods and energy rise? And is pen- sion scheme hedging sufficient enough to protect them? So, with inflation rising to levels not seen for three decades, should investors be afraid… be very afraid? You can read our take on the issue from page 18. We also examine the impact, if any, that COP26 is having on institutional investors. Have the numerous pledges and investor alliances forged during November’s confer- ence changed how pension schemes invest? Find out from page 28. Also in this issue, we look at the investment case for UK equities. With the departure from the EU almost finalised and inflation rising across the globe, we ask, from page 38, if it is time to look again at the increasingly unloved domestic equity market? China is rarely out of the headlines and despite recording enviable levels of growth, there is concern of a crackdown on private businesses. If true, does it affect the long- term investment case of the world’s second largest economy? (Pages 42-45). Finally, we spoke to James Brooke Turner of the Nuffield Foundation about how he, as investment director, is funding the charity’s research into improving social wellbeing. The interview starts on page 12. Many of the issues covered in this edition have helped to make it an eventful start to 2022 for institutional investors. We hope to give you something to add to the conversation.


Mark Dunne Editor


m.dunne@portfolio-institutional.co.uk


Issue 110 | February 2022 | portfolio institutional | 3


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48