¿Cómo protegerse de la inflación?

One of the many side effects of this pandemic is the return of inflation. After several years of very contained inflation at the global level, we are starting the new year with a significant upturn in inflation and the fear that it will become a structural element, rather than a temporary problem.
Several factors have contributed to this upturn in inflation:
It is difficult to predict whether these inflation figures, higher than those desired by the system, will be with us for some time or whether we are facing a one-off upturn that can be solved in the short term. Whatever the case may be, it is better to focus on those actions that we can control, and one of them is, how we invest our money to protect ourselves from the constant erosion that inflation produces in our savings.
For some investors, inflation has not been a problem during these years and they have been able to live with high levels of liquidity (current accounts, deposits, short-term fixed-income products) without losing significant purchasing power. However, the conservative investor is now facing the problem of inflation in his savings -without receiving a commensurate return in real terms, which would at least allow him to keep his purchasing power intact- and therefore has to consider, in 2022 to modify its investment plan to improve its returns in real terms. in real terms.
As is often the case in the world of sports "the best defense is a good offense and one of the best ways to protect against the long-term erosive effect of inflation is to invest in real assets and equities. in real assets and equities.

Real assets, historically good protectors

Real assets, such as gold, commodities and real estate, have historically been good inflation protectors.

Earlier we discussed the importance of focusing on those factors that we can control when managing our savings.
Investing in commodities or precious materials such as gold also makes us dependent on uncontrollable external factors, which may work against us and not effectively protect us against inflation. Gold's performance in 2021 is a good example of this.
On the other hand, one of the disadvantages of direct investment in real estate is the high amount of transactions, the lack of liquidity and the high transaction costs.

Equities, a protective element that generates positive returns

For the reasons outlined above, we would like to focus on investing in equities as a hedge against inflation and from which we can also expect positive returns in real terms over the medium term.

When we invest in equities, we are really investing in companies and businesses that are part of our daily lives in very different ways, but at the end of the day, they are businesses that also have to deal with growth and inflation to balance their books.
In a scenario of increased inflationary pressure, the leading companies leading companies, with solid and growing business models, and which also have solid balance sheet structures, are undoubtedly the best prepared to face this type of situation.In a scenario of increased inflationary pressure, leading companies with solid and growing business models and solid balance sheet structures are undoubtedly the best prepared to deal with such situations. This group of companies that meet the requirements we have listed above are often referred to as "quality companies".
In a scenario of higher inflation, leading and quality companies are able, on the one hand, to correctly manage their production cost increases and, on the other hand, raise prices to consumers to compensate for the negative effect of cost increases. In addition, most of these companies are able to increase prices above average and obtain a profit on their income statement by achieving a positive differential between increased revenues and lower cost increases.

Conversely, companies with lower operating margins and without competitive advantages in their products or services may not be able to pass on their cost increases in price increases, resulting in a negative differential in their income statement.
Therefore, a prudent and effective way to protect against higher inflation scenarios is to be a prudent and effective way to protect against higher inflation scenarios is to be invested in equities in a diversified way in a portfolio of leading, quality companies, as they will be better able to adapt to this scenario, in addition to being able to achieve an extraordinary spread thanks to their competitive advantages.
Beka Asset Management has two liquid global equity investment funds aimed at all types of investors: the Beka International Select Equities and the Beka Optima Global.
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