Inflation-linked bonds “risk-free”
Ben Alexander, a New Zealander who co-founded Australia-based Ardea Investment Management, told the Institute of Financial Professionals (INFINZ) conference this week that "breakout" inflation is a possibility investors need to be prepared for but are complacent about due to recent history.
One of the reasons higher inflation is likely, he said, is due to the quantitative easing taking place in a number of countries including the United States.
"Quantitative easing is printing money in almost a literal sense because the money supply expands to buy bonds out of the market," he said.
"The big thing it comes down to is what's the purpose of buying those bonds? Usually the plan is to buy them and hold them then sell them when the economy recovers. But will the economies recover to a sufficient extent to allow them to be sold on the market?"
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
