The specter of an inflationary spiral currently hangs over the world economy. Already, according to Eurostat, the statistical office of the European Union, the rise 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 single European currency.
Faced with this monetary erosion which is cutting into savings, several investment solutions can be chosen by savers to protect themselves. A relatively unknown – and complicated to implement – is to invest in inflation-indexed bonds. These financial products are loans, issued mainly by States on the financial markets, for which the repayment of capital and the payment of interest are contractually indexed to an inflation indicator.
Caution
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 rise in prices. By way of illustration, since the beginning of the year, according to the ICE-Bank of America stock market indices, French sovereign securities have thus lost approximately 13% of their value, while, at the same time, inflation-linked French sovereigns fell only 4% (end-August).
However, it should be borne in mind that it is not always easy for a particular saver to be able to trade inflation-linked bonds on the stock exchange. Another essential element to take into account before positioning yourself on this market: the risk of “persistent fall in prices during the life of an inflation-linked bond which would inevitably affect its profitability in the end”underlines 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. Nevertheless, investors are advised to exercise caution on these financial products. It is in fact a question of carefully assessing the various future inflation scenarios in order to avoid any disappointment in terms of performance, knowing that “the peak of inflation in the euro zone should be reached on the 4e quarter of the year 2022 », believes Abdel-Rani Guermat. However, according to a study published by Lazard Frères Gestion, it is not yet too late to take an interest in this asset class.
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