XxX | Feature Contents Editorial


INFLATION: COMING SOON?


If it’s not one thing, it’s another. Institutional investors already assessing the health of their assets following the lockdown ordered in response to the Covid pandemic could soon face another threat: inflation.


The economic shutdown has made a change in price levels for goods and services more likely, we argue in our cover story this month (pages 28-31).


It is hard to imagine that record low pricing levels could be maintained for much longer. Indeed, inflation growth outperformed expectations in July, a sign that investors need to be aware of what could be on the way.


And those who could be worst hit are the cash-strapped maturing schemes that have swapped growth assets for income generating investments. Unless they are hedged against such an event, the value of their returns is going to fall.


The main catalyst could be a slowdown in global trade, while a recovering oil price could be another factor. Also in this month’s edition, we look at executive pay to see if performance-related pay in line with industry standards helps create sustainable businesses. Our coverage starts on page 36. We also speak to the new chief investment officer of BA Pensions. David Stewart took over weeks before the lockdown started and explains how he has managed the schemes remote- ly in his first few months in the role (pages 18-21). Finally, we take a look at equity valuations. With the gap between stock market prices and fundamental economic data bigger than ever, why do institutional investors continue to invest in the stock market? (pages 44-48). Stay safe.


Mark Dunne Editor


m.dunne@portfolio-institutional.co.uk


Issue 96 | September 2020 | portfolio institutional | 3


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