Higher inflation rate on its way: portfolio managers

The inflation rate in Canada will rise "slightly, but meaningfully" in the next 10 years, according to the results of a study released today by ...

The inflation rate in Canada will rise "slightly, but meaningfully" in the next 10 years, according to the results of a study released today by the Portfolio Management Association of Canada (PMAC).

The survey of the CEOs of 24 of the country's leading investment companies found that they believe the inflation rate will rise to 2.8% over the next decade – almost 1% higher than the historical rate for the previous 10 years of 1.9%.

"All investors should draw on these directional insights in making their asset allocation choices and consider the impact of higher inflation on their portfolios when making investment decisions," said PMAC president Katie Walmsley.

According to the study, bond returns – which averaged 6.2% over the last decade – will only earn 2.9% in the next 10 years. What this means, said Bob Hill, past chair of PMAC and current managing director of Coleford Investment Management, is that for fixed income investors, their earnings will only be slightly higher than the predicted inflation rate.

"[For the fixed-income investor], your purchasing power is essentially being maintained, but nothing more," Hill told Business in Vancouver.

Other predictions based on the survey results are that:

  • Canadian equities are projected to earn 7.4% over the next decade, compared with 9.8% recorded over the past 10 years;
  • global equities are set to earn 7.8% over the next 10 years, compared with the 3.6% return they've had in the past decade; and
  • emerging market equities will return 9.1% over the next decade, compared with 11.9% over the past 10 years.

The full results of this survey will be discussed today at PMAC's 2012 Annual Conference and AGM today in Toronto.

ecrawford@biv.com

@EmmaCrawfordBIV

comments powered by Disqus

More from Economy

Real estate sales in the province stall in August

Read Article

Insider trading: September 26, 2017

The following is a list of stock trades made by corporate executives, directors and other company insiders of B.C.’s public companies filed in the week ...

Read Article

B.C. Crown corporations post steady revenue growth

The 20 largest Crown corporations have increased revenue an average of 12% since 2016

Read Article

Taiwanese bike company seeks business in Canada

Country’s bike industry looks to B.C. for growth opportunities and to reverse sales decline

Read Article

BIV on Global BC September 25, 2017: NAFTA talks, round 3; Alibaba ...

Hayley Woodin discusses the third round of NAFTA talks underway in Ottawa. Plus: Alibaba launches payment processing service in Canada

Read Article

Subscribe to our mailing lists

You may withdraw your consent at any time.

* indicates required

Newsletters

* You can modify your newsletter subscriptions at the bottom of any newsletter you receive.
Business in Vancouver Media Group
303 West 5th Avenue, Vancouver, British Columbia
V5Y 1J6 · Canada
604-688-2398
×