Inflation can erode the real returns of investments however tools like inflation-linked bonds could help investors mitigate the effects of inflation on their portfolio.
Why invest in inflation-linked bonds?
Inflation erodes the value of capital. It is therefore important to consider the real value (the value after allowing for inflation) rather than the nominal value (before inflation has been calculated) of a bond. As inflation-linked bonds provide a principal and coupon payments that are adjusted by the rate of inflation, they can provide protection against rising prices.
If 10-year annualised inflation is 2.5%, capital is eroded by 200% over the period.
Source: AXA IM- for illustrative purposes on as at November 2023
AXA IM expertise
AXA IM has over 30 years of experience as an inflation-linked asset manager and our inflation team are recognised experts with a proven track record over different market cycles.
As market leaders in the development of inflation-linked products, such as the launch of a total return inflation strategy, we offer clients a wide range of inflation linked bond strategies to meet their needs.
At AXA IM, our inflation strategies are active approaches run by a dedicated inflation-linked bond investment team. Our size gives us a privileged status in our dealings with counterparties and gives us access to policy makers and market participants.
We combine our global top-down process with ESG scoring to offer investors inflation solutions that are flexible and can adapt to market conditions.
By providing a dynamic exposure that focus’ primarily on inflation-linked bond markets, we believe our strategies offer investors a purist inflation approach.
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Seeks to create performance by investing mainly across inflation-linked bonds issued in OECD countries, over a medium term period.View funds
Seeks performance by investing mainly in short duration inflation-linked bonds issued in OECD countries, over a medium term period.View funds
Getting to grips with inflation
No assurance can be given that our inflation strategies will be successful. Investors can lose some or all of their capital invested. Our inflation strategies are subject to risks including counterparty risk, operational risk, liquidity risk, credit risk, and the impact of any techniques such as derivatives. The use of such strategies may also involve leverage, which may increase the effect of market movements and may result in significant risk of losses.