219. Currencies, corrections … and inflation!

James Mahon, co-manager of the SVS Church House Tenax Absolute Return Strategies fund, tells us about some deflationary forces that are starting to come through and why he thinks inflation could peak in the next few months. He explains what the ‘yield curve’ can tell us about an economy’s health and why bonds that are due to mature in just a few years’ time are more attractive than those that have a long time to maturity. James also discusses the fall in the value of the pound versus the US dollar, tells us which parts of the UK equity market are now looking good value, and closes with details as to why Floating Rate Notes can be very useful investments.
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SVS Church House Tenax Absolute Return Strategies is a multi-asset fund, which invests directly in assets, rather than using the ‘fund of fund’ route. It targets positive returns over rolling 12-month periods. The managers place a heavy emphasis on capital preservation, and it is one of the few absolute return funds with a track record which goes back beyond 2008 and the global financial crisis.

What’s covered in this episode:

  • Deflationary forces = corrections to commodities’ prices
  • Inflation peaking
  • The Fed Reserve and its effect on inflation
  • Counterintuitive downward sloping yield curves
  • The dominant US dollar
  • Extraordinary moves in the index-linked gilt market
  • The potential for very high returns from short-dated bonds
  • Exploiting mispricing opportunities in volatile periods
  • Floating Rate Notes and their benefits for investors
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