Aegon Asset Management is aiming to double the size of its £54.4m inflation-linked fund in the next 12 months.
At the Money Marketing Investment Summit, Aegon co-head of fixed income Stephen Jones said he is increasing his euro weighting to take advantage of potential European Central Bank rate rises.
He said: “We raised the fund’s currency risk exposure to 6 per cent two weeks ago and cut sterling to 92 per cent correspondingly. We are now underweight sterling in favour of the euro.
“Sterling is not going to benefit from any interest rate support from the banks that would counter inflation. Despite its debt dynamics and issues in southern Europe, the euro is attractive as the ECB is willing to raise rates to counter inflation.”