Armstrong: Expect QE and inflation this year

Further quantitative easing, low short-term interest rates and rising inflation will be key themes for the year ahead, says Patrick Armstrong at Distinction Asset Management.

The former Insight multi-manager says he expects short-term interest rates to remain near zero in the major Western economies throughout 2011 and another wave of QE as unemployment remains stubbornly high. "The most important thing investors can do today is position their portfolios for much higher future inflation," says Armstrong. "Allocations to government bonds do not make sense at current yield levels, given they offer negative real returns with CPI at 3.7% and rising. Inflation will continue to be a major theme for the coming decade." Armstrong, co-manager of the IM Distincti...