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F&C identifies three themes for inflationary markets

Fund of hedge funds manager F&C Partners is weighing up investment opportunities in hedge funds that are benefiting from rising inflation.

The company has identified three investment themes which it believes represent good investment opportunities for hedge funds.

One is the rise of big emerging economies that are competing for resources. This is pushing up oil prices and inflation, making emerging markets and resource companies look good from an investment viewpoint.

Distressed investing is another area that F&C Partners believes will deliver strong returns for hedge funds as global earnings slow, financing becomes harder for companies to get and bankruptcies increase.

Short-term volatility is seen by F&C Partners as the price to be paid for strong returns, so its final theme is buying equities when the rest of the world is bearish.

Senior partner Francois Barthelemy says: “We are starting to see a number of hedge fund launches that are extracting value from the beneficiaries of the inflation surge, such as emerging countries, resource-based companies and consumers based in those countries. We will be looking at those parts of the world closely.”

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