Addressing escalating price increases: Strategies for coping

In the current economic climate, investors are grappling with the impact of rising inflation rates and the subsequent need to adjust their portfolios. Here's a breakdown of some key considerations and strategies.

Firstly, it's worth noting that a certain proportion of gold should be included in the portfolio. For those interested in gold investment, an ETC on the gold price is more than sufficient.

The stock allocation can be represented via an ETF on the MSCI, reflecting a general trend towards a higher weighting of stocks. This trend is more likely due to persistent low-interest rates than to concerns about inflation. However, clients may express questions and a desire to invest in bonds despite the unimproved yield.

Negative interest rates on accounts are acceptable, as the disadvantages in yield are marginal. An investment in US corporate bonds can also be considered, but it's important to note that long-term bonds and open real estate funds do not belong in a portfolio due to uncertainty about their yield.

When it comes to addressing liquidity concerns, a good alternative is ETFs on short-term government bonds in euros. The European Central Bank (ECB) considers an inflation rate of around 2 percent as desirable, and while the inflation rate has risen sharply this year, it's possible that it will settle at a higher level. Approximately half of the inflation increase is due to one-off effects, such as higher hygiene standards at hairdressers, CO2 pricing, VAT reversal, and increased oil price.

It's important to note that while certain inflation concerns are justified, there are no exaggerated fears about hyperinflation among clients. The behavior of clients might change if there is a new inflationary surge, particularly if it's triggered by a significant increase in the prices of heating oil and gasoline after a federal election. This could occur if parties or political groups that pursue aggressive climate policies focusing on rapid reduction of fossil fuel use, such as the Green Party, come to power.

In conclusion, fine-tuning is more appropriate than a radical portfolio overhaul. A portfolio should include global quality stocks, and investors should consider a balanced approach that includes both stocks and gold, while keeping an eye on the liquidity provided by short-term government bonds.