Inflation-focused British macro investment firm Ruffer Investment Management is seeking to expand a recently launched US investment vehicle, reported Reuters.
The firm is in discussions with institutional investors to expand the vehicle which it hopes will grow to $5bn in assets over the next five years, a Ruffer investment director Jenny Renton told the news agency.
The firm’s long-held view that markets are bound to navigate structurally higher inflation and its sizeable allocation to inflation-linked bonds is appealing to US investors, said Renton.
He said: “The timing was good, our story was resonating, our fears about inflation and inflation volatility were resonating.”
According to Renton, Ruffer’s US investment vehicle, which was launched this January, is currently worth $500m.
The recent rise in the US consumer prices has made Federal Reserve increase rates and slash its balance sheet to cool the economy.
This shift in its formerly accommodative monetary stance has been weighing severely on almost all asset classes in financial markets this year, the report said.
Renton said: “Our core structural view that we have held for some time is that we’re moving into a period of higher inflation with yields below the rate of inflation.
“More importantly, in the short term, we’re going to see inflation volatility.”
The financial markets globally are witnessing decreased liquidity this year as central banks rapidly withdrew previously announced stimulus measures. This has led to wild intra-day yield swings.
Renton said: “Central banks will be unable to tighten conditions to bring inflation meaningfully back below the 2% target, so we think in reality inflation targets will move.”