Our company today released a comprehensive market report titled "Asset Allocation Strategies in the Post-Inflation Shock Era." This report provides a detailed analysis of inflation trends in various countries around the world and proposes the optimal approach to asset allocation in the future investment environment.
Main research findings:
- The polarization of inflation trends: Although inflationary pressure is easing in advanced countries, a high-inflation environment is expected to continue in emerging market countries. In particular, in Latin America and some Asian countries, structural inflation risks remain.
- Wage increases and the stickiness of service prices: In many advanced countries, wage increases and price increases in the service sector continue, and the resolution of the "last mile" of the inflation rate has become an issue.
- Structural upward pressure on resource prices: Due to energy transition and geopolitical risks, it is analyzed that there is a high possibility of upward pressure on the prices of energy and important mineral resources in the medium to long term.
- Divergence in central bank policies: While the Federal Reserve System (FRB) in the United States and the European Central Bank (ECB) are moving towards mild monetary easing, the Bank of Japan is in the initial stage of a monetary tightening cycle, and the global asynchrony of policies is progressing.
Proposals for strategic asset allocation:
- Strategic allocation to inflation-linked bonds: As a hedge against medium-term inflation risks, we recommend allocating to TIPS (U.S. Treasury Inflation-Protected Securities) and inflation-linked bonds of various countries.
- Tactical use of commodities: We propose introducing tactical commodity allocation to a part of the portfolio to function as insurance against inflation risks.
- Sector rotation strategy: By taking advantage of the differences in sector performance in an inflationary environment, we recommend making selective investments in sectors with high price-setting power, such as finance, energy, materials, and healthcare.
- Utilization of alternative investments: As a complement to traditional stock and bond allocations, the strategic incorporation of alternative assets such as real estate, infrastructure, and private credit is effective.
Kenichiro Yasuda, Head of the Research Department, commented, "Although the acute phase of the inflation shock has passed, we have now entered a complex situation where different inflation dynamics can be observed in various countries and regions. In such an environment, understanding the macroeconomic cycle and making flexible adjustments to asset allocation are the keys to investment success."
The full version of the report is available to institutional investors. For more details, please contact our company.
