7IM Real Return boosts inflation protection after being hurt by 'crushed' expectations

Matthew Yeates outlines roadmap for fund's recovery

The 7IM Real Return fund is positioning for a rise in inflation heading into the remainder of 2020 and next year, according to lead manager Matthew Yeates, after the strategy was punished when inflation expectations were "crushed" in the market turmoil in the wake of the coronavirus pandemic.

The multi-asset fund, which aims to provide a total return that exceeds UK CPI inflation by 2% over a rolling three-year period, fell 11.7% in the month to 20 March amid the market chaos of the coronavirus sell-off, according to data from FE fundinfo. Yeates, who serves as 7IM's head of alternatives and quantitative strategy, explained the firm's allocation to inflation protection strategies, such as explicit inflation insurance, was perhaps the biggest detractor from 7IM Real Return's performance in the first quarter of this year, as "inflation expectations got crushed". Invesco's Sy...