It’s not surprising that the great theme of the Morningstar Investment Conference this week was the threat posed to equity portfolios by inflation and rising interest rates. The overwhelming sense of the day was that a regime change is under way, whereby inflation and interest rates will be higher for longer.
For the grey-haired (and sans-hair) investors who spoke, that environment is familiar. But for investors who have only been in the market for 15 years, a difficult new world awaits.
Platinum Asset Manager CEO, CIO and co-founder Andrew Clifford believes a policy mistake by central banks is all but certain, whether that’s raising rates too high and hurting the economy, or even cutting rates too soon and risking the return of inflation. The challenge is how to position your portfolio.
For Clifford, the key is to find companies “where the earnings are here and now”, rather than companies where earnings are expected to grow to justify their valuation.
