Cardinal Point’s CIO Matt Carvalho was recently featured in an article in Citywire about how strategists are positioning portfolios to fight off inflation. The piece includes a peak into the inflation playbooks of a number of investment experts.
A few highlights:
- When inflation is high, it tends to have the biggest impact on the fixed income market. This means bonds may see some potential downside.
- Because Cardinal Point matches the risk portfolio of each client’s portfolio to that client’s unique situation, they don’t make dramatic moves based on any economic number.
- However, Cardinal Point has slowly been increasing the weight of the alternatives segment of client portfolios over the last few quarters to avoid the opportunity cost of bonds with their low nominal return expectations.
- Carvalho expects the Canadian stock market overall to continue to see strong returns in the face of rising inflation.
- He does not expect to see inflation of around 5% in 2023 and beyond.
- Instead, as supply chain issues resolve and product demand slows a bit, inflation should stabilize.