- 3 min
Amundi Funds Bond Global Inflation: A good way to protect from global inflation
The consensus outlook of analysts is currently for a resumption of growth and rising global inflation over the long term. Inflation-linked bonds afford a suitable option for investors wishing to protect themselves from inflation. With Amundi Funds Bond Global Inflation, Amundi offers its clients a tailored and diversified solution, giving them access to a global bond universe. This UCITS IV compliant sub-fund of the Luxembourg-domiciled umbrella fund (SICAV) Amundi Funds aims to outperform its benchmark(1) by selecting the international inflation-linked bonds with the best risk/return profile over 3 years(2).
Inflation is fuelled by a number of factors: the rise in commodity prices, in particular due to geopolitical friction, the inflation that the Asian continent is now exporting and the substantial debt of individual countries. Laurent Gonon, the manager of Amundi Funds Bond Global Inflation, says: "Everything in the current environment is pointing to a resurgence of inflation. The timing is uncertain, but inflation is no longer the public enemy No. 1 that it has been over the last 30 years. In addition, investors are not yet worrying about this threat, which means that it is possible to invest in this market at attractive prices. Lastly, interest rates are too low relative to current growth prospects and are therefore expected to rise, which should lead inflation-linked bonds to outperform conventional bonds."
To achieve his investment objective, the fund manager sets his expectations regarding real interest rates and inflation rates based on a macroeconomic scenario and proceeds in four steps(2):
- Management of the sensitivity to interest rates: the fund manager over or underweights the sensitivity of the sub-fund relative to the benchmark and allocates this sensitivity by maturity segment along the real yield curves(3).
- Arbitrage between inflation-linked bonds and fixed-rate bonds: an inflation-linked bond will be more attractive than a conventional bond for the manager if his inflation expectations are higher than those of the market(3).
- Geographical diversification: arbitrage between countries.
- Bond selection.
Laurent Gonon adds: "We offer investors broad geographical diversification. The strategies that we implement in the fund are predominantly between the euro zone, the United States and the United Kingdom, but also Canada, Sweden or Australia. Moreover, we carefully select each bond, including within the euro zone where we arbitrage between euro zone and French inflation(3)”.
Amundi Funds Bond Global Inflation which generated a net performance in 2011 of more than 9%(4) is managed by an experienced asset management team supported by complementary expertise and advanced proprietary tools. The team is an integral part of one of the biggest euro fixed income asset management teams, which comprises over 30 investment professionals and has assets under management of more than € 235 billion(3). As a pioneer in inflation-linked bonds with a first fund launched in May 2000, Amundi stands out as a major player in this asset class.
1. Barclays Capital World Government Inflation Linked All Maturities Hedged Euro. 2. For further details on the investment policy of the sub-fund, please refer to the prospectus. 3. For illustration purposes only. 4. Launch date of the sub-fund: 25 August 2009