Inflation biggest threat to investments, expert claims

Tue, 22 Jul 2008

Inflation is now a bigger threat than the credit crunch to people's investments, it has been claimed.

According to Richard Moore, manager of the Santander UK Growth Fund, high prices, especially the increasing cost of oil, will impact investments in many firms.

He said: "We are therefore remaining defensive and underweight in cyclical sectors and in smaller companies, highly leveraged companies or those showing balance sheet weakness."

The next round of profit reports will indicate just how much of an impact inflation has had on consumer spending and, in turn, what affect it will have on investments in the longer term, he added.

As long as oil prices remain high, equities will be an unattractive investment as this will prevent a stock market rally, he stated.

Yesterday, Francois Barthelemy of F&C Partners, claimed that falling share prices mean that now is the time to pick up bargain investments.

According to Mr Barthelemy, equity and investment trusts remain an important part of any portfolio.
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