Brookes: Gilts may appeal if 'too much inflation' priced in

Cazenove's Marcus Brookes may start buying government bonds "pretty aggressively" if too much inflation is priced in.

The manager of the firm's £12m Diversity Income fund, which was launched last December, says inflation could actually prove to be ‘deflationary' in the longer term, with the absence of wage rises and income sources. "If you are spending more money buying essentials, discretionary spending goes down, so maybe inflation will cause ‘demand destruction', which is what happened in 2008." He adds: "If we start seeing too much inflation being priced into government bonds, you could actually see us buying them pretty aggressively in this portfolio - but we are not there yet." However, he s...