General Information

Inflation Linked Products

Investment Philosophy

  • The return on an investment should compensate for the delay in consumption and for the expected loss of purchasing power due to inflation. If realised inflation over the investment horizon turns out to be higher than expected inflation, the investor suffers a loss of purchasing power. Inflation risk is often underestimated, because people tend to think in nominal terms
  • Inflation linked bonds are less risky than conventional bonds because they guarantee a real rate of return over time
  • Diversification into inflation-linked bonds enhances the risk/return profile of a portfolio by reducing the return volatility
  • We complement traditional inflation linked bonds by combining nominal bonds with inflation swaps to build synthetic inflation linked bonds. This allows us to overcome the shortcomings of the inflation linked bond market like poor diversification (only a handful of sovereign issuers) and long real duration

Capabilities and Solutions

  • We offer a range of retail and institutional funds on European, US and global inflation
  • Our synthetic approach allows us to offer a Swiss franc inflation linked product (both as retail and institutional fund). We invest in nominal Swiss franc bonds and proxy-hedge the Swiss inflation risk with inflation swaps on European and US inflation
  • We also offer inflation linked mandates for institutional clients referencing traditional and customized inflation linked benchmarks
  • For institutional clients we offer inflation linked overlay solutions which allow to hedge inflation risk without changing the allocation of the underlying assets. This can also be done in the context of a Liability Driven Investment approach

Secondary Content

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