Managers: How we are guarding against inflation risks

Fund managers are employing a number of strategies to guard against rising inflation, but argue better value can be found outside the UK index-linked market as demand soars.

The UK Consumer Price Index (CPI) rose by 0.6% for the year to July, the highest level since November 2014, and held steady in August, with economists predicting further rises in the coming months as sterling weakness following the Brexit vote pushes up the cost of imports. Some commentators have forecast CPI inflation could break through the Bank of England's 2% target in early 2017 and near 3% by the end of next year. Investors have been flocking for protection, pushing the IA UK Index-Linked Gilts sector up 22% over the past six months. It jumped by 10% in the week following the EU...