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INSIGHTS

You win. In either an inflationary or deflationary scenario.

  • tbgidley
  • Nov 18, 2022
  • 1 min read

Copy of LinkedIN post, 2021


You win. In either an inflationary or deflationary scenario.


In asset allocation models and fixed income strategies; Nominal based bonds, Linker’s, Tips, and Sukuk are all being asked to deliver a positive Real return. Yes, one may choose to employ a hedging technique, but this is not available to all participants. The costs, complexities and less than absolute correlations are not available/acceptable to all.


Sovereigns, political subdivisions, corporate structures, and individuals want a cost-effective fixed Real structure where a credit scoring positive for the borrower and the lender is delivered.


Today’s opinions have a standard deviation of +/- 3. Bridgewater to Schwab, Dalio to Jones. Bonds are…Not currently a prudent investment. To other tail of distribution… buy bonds selectively to keep your asset allocations in what is acceptable fiduciary prudence.


With a constant purchasing power based structure, YOU WIN wherever the Nominal rates move.


Will you sleep better if you invest or fund in a structure that starts in a constant purchasing power? Yes

Will you meet or exceed fiduciary responsibility? Yes


Is it a paradigm shift? Not for us to declare, but our research says yes.

 
 
 

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