Fidelity Answers: The Investment Podcast Fidelity Answers: What kind of fixed income can protect my portfolio when inflation is rising?
May 19, 2026
Tim Foster, a fixed income portfolio manager specialising in rates and macro, and Ravin Seeneevassen, an inflation-linked bond specialist, discuss inflation measurement, central bank responses and why nominal bonds may no longer hedge equities. They explore inflation-linked bond mechanics, tariffs and pass-through, AI’s potential impact, real‑yield strategies and risks like energy shocks and fiscal policy shifts.
AI Snips
Chapters
Transcript
Episode notes
Markets Underprice Structural Inflation Risk
- Markets are underpricing inflation risk because supply-chain reconfiguration plus pro-cyclical fiscal measures make higher inflation more likely.
- Ravin Seeneevassen points to tighter immigration, reduced central bank independence, and security-driven investment as structural inflation drivers.
Why Nominal Bonds No Longer Always Protect
- High and persistent inflation changes bond-equity correlation so nominal bonds may no longer cushion equity drawdowns.
- Tim Foster notes that when inflation persistently exceeds ~3% bonds and equities can move together, especially with supply shocks.
Use Inflation-Linked Bonds To Preserve Purchasing Power
- Use inflation-linked bonds to protect purchasing power because principal and coupons adjust with a reference CPI or RPI index.
- Ravin Seeneevassen explains inflation-linked bonds increase principal with measured inflation so real value is preserved.