The specter of an inflationary spiral currently hangs over the world economy. Already, according to Eurostat, the statistical office of the European Union, the increase in prices, at an annual rate, in the euro zone stood at 9.1% in August 2022. This is a record level since the existence of the European single currency. .
Faced with this monetary erosion that is cutting into savings, savers can opt for various investment solutions to protect themselves. A relatively unknown -and complicated to implement- is to invest in bonds indexed to inflation. These financial products are loans, issued mainly by the States in the financial markets, for which the repayment of principal and the payment of interest are contractually indexed to an inflation indicator.
For example, the French state regularly offers bonds indexed to the consumer price index in France. With this type of securities in the portfolio, the investor can thus curb the negative effects of a price increase. By way of illustration, since the beginning of the year, according to ICE-Bank of America stock indices, French sovereigns have lost approximately 13% of their value, while at the same time, French sovereign inflation-linked securities fell only 4% (end of August).
However, it should be noted that it is not always easy for a particular saver to be able to trade inflation-linked bonds on the stock market. Another essential element to take into account before positioning yourself in this market: the risk of “persistent decline in prices over the life of an inflation-linked bond that would inevitably affect its profitability at the end”emphasizes Abdel-Rani Guermat, inflation manager at Ostrum AM, a subsidiary of Natixis Investment Managers.
For now, “Inflation expected by market participants continues to rise in Europe”, observes Malik Haddouk, director of diversified management at CPR AM. However, investors are advised to exercise extreme caution with these financial products. In fact, it is about carefully evaluating the different future inflation scenarios to avoid any disappointment in terms of performance, knowing that “The peak of inflation in the euro zone should be reached on 4me quarter of the year 2022 », believes Abdel-Rani Guermat. However, according to a study published by Lazard Frères Gestion, it is not too late to take an interest in this asset class.
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