Podcast

Inflation: What’s an investor to do?

Inflation remains top of mind for many. The team gathers to discuss what investors can do to combat rising prices.

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November 15, 2021 | 3 minute read

About this episode:

With CPI reaching a 30-year high, inflation remains top of mind for many. In this episode, Chief U.S. Economist Lara Rhame joins Director, Investment Research, Kara O’Halloran to discuss her current inflation outlook. Plus, Liquid Alternatives Investment Specialist Beth Anne Byrne joins to offer ideas to help investors protect their portfolios from rising prices.

Transcript excerpt:  

Kara O’Halloran (00:05):

Welcome back to FireSide, a podcast from FS Investments. My name’s Kara O’Halloran. I’m a Director on our Investment Research team here. On today’s episode, we are going to talk once again about perhaps the most discussed topic in markets this year inflation, but more specifically with this focus on inflation has come a renewed interest in the investments designed to protect portfolios from rising prices, namely real assets. So we’re going to touch on what real assets are, why investors have historically turned to them, and perhaps most importantly, what a well-designed real assets portfolio looks like in 2021. So with me to dig into all of this, our Lara Rhame, our Chief U.S. Economist, who has been on the podcast quite a few times by now, and Beth Anne Byrne, who is a Liquid Alternatives Investment Specialist here at FS and is making her podcast debut.

Kara O’Halloran (00:52):

Welcome.

Beth Anne Byrne (00:53):

Thanks guys.

Kara O’Halloran (00:53):

I hear you came with some jokes. I was warned that there were some jokes, so we’ll see. Lara, I want to start with you as always, you know, that’s my M.O., we, along with the rest of the world have talked about inflation a lot this year, quite a few times. So we are recording this in early November. We’re still seeing elevated CPI levels or hearing about supply chain bottlenecks, ports that are full of cargo ships. Everyone told me I’m already too late to have done my Christmas shopping or…

Lara Rhame (01:24):

Well, I need to buy a car so we’re all facing inflation related challenges.

Kara O’Halloran (01:28):

Yeah, exactly. Exactly. So it’s clear that inflation did not prove transitory, at least if we use the definition of a few months, that a lot of people had kind of called for back in the spring. What is your current outlook on inflation? What are you closely watching?

Lara Rhame (01:44):

Sure. You know, to your point, and I think we’re, you know what, I’m going to reiterate this several times, because it’s important to realize that CPI right now it’s 5.4% year on year. And when you exclude food and energy, right, that core CPI number is 4%. It’s the highest since 1991. So if right now the big inflation picture feels different, it’s because it really truly is different. And when you look at inflation right now, you pointed to some really obvious supply bottlenecks that have caused, you know, I do actually have to buy a car. That’s not a joke, unfortunately, but there’s just some acute price pressure on durable goods where we know that there are supply shortages. And we know that there is enhanced demand because of the pandemic. But we’re just kind of seeing it bubbling up from a lot of different areas.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

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Beth Anne Byrne

Liquid Alternatives Investment Specialist

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