Inflation

Inflation fears are back but mitigating forces should not be underestimated, says Jose Luis Pellicer, head of investment strategy and research at M&G Real Estate.

Henning Eckermann, the Swiss alternatives manager’s chief economist, warned investors gathered at the Infrastructure Investor: Europe 2010 forum that developed markets face 75% chance of inflation in the range of 5% to 7%. As a hedge, he recommended they increase their exposure to real assets.

The $119bn pension’s new ‘absolute return’ asset class will include infrastructure investments and could lead to a search for a manager to run the investment programme. The move is part of a wider asset allocation shift to be unveiled at its August meeting after CalSTRS saw its portfolio value tumble 25 percent over the last year.