Investment consultancy firm Elston Consulting has launched five inflation-adapted portfolios which will be available for licensing to wealth managers and financial advisers.
The company already offers five global diversified portfolios and four retirement portfolios through its Elston Portfolio Management arm.
Elston's portfolios are adapted for inflation by replacing the bond allocation with an allocation made up of liquid real assets and absolute return funds.
They were created based on research Elston conducted into which assets performed best during the last inflation shock in the 1970s, which found that bonds struggle to retain value in a high inflation or rising interest rate regime.
Henry Cobbe, head of research at Elston, said the portfolios were not prohibited from investing in bonds and that these could be introduced into the products as inflation returns to lower levels.
He said: "We know advisers and their clients are looking for ways to rethink the traditional 60/40 model to mitigate the impact that inflation has on portfolios – particularly on bonds. We hope this new strategy will help meet this need."
The five portfolios are defined by equity risk and Cobbe said they would allow advisers to help their clients beat inflation without having to go up the risk scale by increasing their exposure to equities.
To find absolute return funds to put into the portfolios, Cobbe said Elston screens for funds which provide annualised returns and risk-adjusted returns over three years.
Meanwhile the equity allocation of the portfolios is biased away from growth investing towards value, which Elston says is linked to the resilience of earnings today rather than in the future.
Elston, which was launched in 2012, has also appointed Hoshang Daroga, formerly a portfolio manager at Copia Capital Management, as investment director.
Daroga said: "Advisers are under increasing pressure to deliver for their clients against an incredibly challenging backdrop. In my role as investment director will help advisers we work with deliver agile and innovative solutions delivered in any required format – portfolios, funds or indices – using our research, analytics and insights."
damian.fantato@ft.com
