Real returns are eroding as inflation soars – but fund manager Brian Arcese has a number of stock picks that he says are effective inflation hedges. U.S. inflation rebounded in April, with the consumer price index up 8.3% from a year ago – higher than expected, but down slightly from March’s peak. Meanwhile, the Federal Reserve’s preferred measure of inflation rose 4.9% in April from a year ago, a slower pace than March’s 5.2%, indicating downward pressure. prices will show signs of falling. However, inflation remains high and continues to be a source of volatility for investors. “Our expectation is that inflation will moderate from here, but in the base case to remain significantly above where it has been for the past 15 years,” Arcese said. Arcese is a portfolio manager at Foord Asset Management, a boutique investment firm with $8 billion in assets under management. He manages the Foord International Fund – a multi-asset portfolio that aims to deliver returns that exceed US inflation for 5 years or more – as well as the Foord Global Equity Fund, a product-only product. for stocks that are priced according to the MSCI World Index. Speaking to CNBC on Monday, he noted that beating inflation over time is a “mark” of what the Foord International Fund does. “We don’t necessarily aim to give inflation +5[%] in any given quarter or any year, but certainly throughout the cycle. “The fund has delivered an annual return of 6.7% since its inception 25 years ago, easily beating the annual inflation rate of 2.4% over the same period.” a lot depends on the cash flow and the quality of the management team and how much income the business can generate, and in particular, the income based on cash flow”, Arcese added. for commodities, through the combination of equity-related goods and physical goods. “In any kind of inflation, it is real wealth that protects against capital erosion. And so owning stocks that own real assets is a key reason these are actually the best hedging measures,” Arcese told CNBC Pro. “makes sense” in a portfolio. “We agree with many in the market that the prices of goods in certain bags may have outpaced themselves. We have started pruning slowly [our holdings], but we’re still very comfortable with long-term investments in many of these names,” he said. Stock Picks In the mining sub-sector, Arcese said the company only invests in “high-quality” miners. “with the “top caliber” of management, as well as those who return a significant portion of the cash generated to shareholders.One of his top picks in the field is copper miner Freeport. -McMoran, who he describes as “one of the lowest cost copper producers globally” and a dividend payer. “The return that we are trying to provide investors with is actually the total profit. So it can be a combination of capital appreciation and dividends that the company returns to shareholders. “We want to invest in companies that are happy to return that substantial amount of cash to shareholders,” he said. miner Lynas and Irish mining company Kenmare Resources. In the broader commodity sector, he also likes chemicals manufacturers FMC and Livent, Canadian fertilizer companies Nutrien and Bayer.
A truck loads ore into a crusher in an underground area at the Freeport McMoRan copper and gold mining complex in Papua province, Indonesia.
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Real returns are eroding as inflation soars – but fund manager Brian Arcese has a number of stock picks that he says are effective inflation hedges.
