Six ways to invest in an inflationary environment
UK inflation rose to 9% in April, its highest level in 40 years and almost double the rate the Bank...
It’s week three of lockdown in the UK, with many working from home well before that. But it still feels like longer. Mother’s Day was spent indoors, now the Easter bank holiday weekend is about to be spent in similar fashion, and quite possibly both May bank holidays as well.
I wanted to look for a silver lining to all this time stuck inside. One good thing to come out of all of this is that our food budget has decreased significantly – we are not eating out so although I’m snacking far more than I should be, the total amount spent each week has been less. So, I decided to have a look through the rest of our budget, to see where else I could find extra money and maybe put it to better use.
“Be strong because things will get better. It may be stormy now, but it never rains forever.” — Evan Carmichael, author and entrepreneur
It seems ironic that being stuck inside and forced to cook has made our food expenses decrease, but without the opportunity for date nights and lunches out, it’s a significant difference. Next week also happens to be my husband’s birthday, and no doubt virtual drinks will be a whole lot cheaper than any bar tab — and with our newly delivered board, at least we can still play darts at home!
Between less nights out, no monthly travel expenses to and from work, our gym memberships on hold, I managed to find £250 in savings a month. Sure, some of that has been spent on other things – like two new plants for my WFH desk – but, the rest could be used to top up my ISA.
But where to put our money? Since I started writing this millennial series, I’ve always discussed my empathy for sustainability and ethical funds within my ISA and pension. But as I explained last week, it’s not so black and white. Maybe now is a good time to branch out and look to diversify into those shades of grey.
Baillie Gifford Global Discovery fund invests in innovative companies that can change the world. It holds Tesla* – certainly an innovative company, but one which has had concerns over employee treatment in the past.
But during the crisis, head Elon Musk has stepped up: delivering over 1,000 ventilators to a California hospital to help with the treatment of patients with COVID-19 and delivering delivered 50,000 face masks to the Seattle home of a University of Washington physician. He has also said on Twitter that he could use the Tesla factory to produce more ventilators to help meet growing demand in US hospitals.
A consortium of over 20 companies, from industrial, automotive, technology and engineering sectors, named Ventilator Challenge UK, is also playing its part in the pandemic.
It has come together to produce medical ventilators and has already received formal orders from the UK Government in excess of 10,000 units and is accelerating production. The companies involved – including Microsoft and Airbus, top ten holdings in Fidelity Global Special Situations going into this crisis** – have taken many of their people from key company projects to serve the national need.
Alcohol never scores very highly in ESG and companies are usually excluded from an ethical fund’s universe. But alcoholic beverage company Pernod Ricard has also stepped up in the crisis, switching production to focus on hand sanitisers. The move was kicked off by its US business arm, in response to the Trump Administration’s call to action against the Covid-19 virus outbreak.
The firm is producing sanitisers at all manufacturing sites and distilleries in the US. Its subsidiaries worldwide are also contributing to local efforts to fight the pandemic. Pernod Ricard India Foundation, for example, is supplying truck drivers with hand sanitisers and masks. The company is a top 10 holding in the Threadneedle European Select fund*.
Banks are never looked upon highly, but HSBC has said that its UK division donated £1m to the National Emergencies Trust Coronavirus Appeal and British Red Cross to help support vulnerable people affected by Covid-19.
It is a holding in ES R&M UK Recovery*, whose manager has also invested in Coca Cola recently – a company many parents avoid due to its fizzy drinks. But across North America, the Coca-Cola Company is re-deploying its resources to meet the needs of those on the frontline of the COVID-19 fight.
In Boston, the company has provided logistics and supply chain support to a not-for-profit, to help produce face shields for frontline health workers. More broadly, the Coca-Cola Foundation has awarded $13.5 million in grants to not-for-profit organizations responding to the coronavirus in North America and Canada. The latest grants support economically disadvantaged communities – with one grant enabling 200 food banks to feed vulnerable populations. Other grants are funding childcare for emergency health workers, mental health and counselling, and other emergency aid resources.
*Source: fund fact sheet, 29 February 2020
**Source: fund factsheet, 31 January 2020