“In a recession our expectation is that bonds will work as they always have.”
Those were the words of Legal & General Investment Management’s (LGIM) Sonja Laud when the chief investment officer spoke with the Financial Times and shared the asset manager’s strategy ahead of a looming economic downturn.
“It’s a big relief that inflation in the UK is lower than expected, but if you look at the actual number it’s still very high and we should not forget this,” Laud, who is reportedly “positioning” for a UK recession, was quoted as saying.
“We have no doubt that interest rate rises will slow down the economy because, otherwise, inflation will not come down sufficiently for central banks to take their foot off the pedal.”
According to the newspaper, LGIM has been buying government bonds and selling stocks in preparation for the recession.
“Whenever inflationary worries are dominating the narrative you have a positive bond equity correlation, but when growth dominates you have a negative one,” Laud said. “In a recession our expectation is that bonds will work as they always have.”
Part of Legal & General Group, LGIM manages assets worth £1.3 trillion.
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