'You need the world's best companies': A global fund manager's tips on how to beat inflation
So what can we learn from those whose job this is?
On this episode of the Investing Show, we talk to David Coombs, head of multi-asset investments at Rathbones, who sifts through the world’s investments to find the pieces of the jigsaw needed to deliver good and reliable inflation-beating returns for investors.
He explains why he does not see risk as a bad thing over a long time horizon, but instead a necessity in order to beat inflation - and why shares have long proven to be the best chance of achieving that goal.
But Coombs says that rather than waste capital on investments he doesn’t think will deliver a return, or help balance where needed, he is looking for 40 to 50 of the world’s best companies.
For the fund manager that means often investing in companies that have high growth potential, such as those in new technologies and shaping long-term trends, which while they may seem to priced expensively are valued highly because investors seen them delivering profits for years to come.
He contrasts this with traditional High Street retailers, which although cheaper in current price-to-earnings valuation terms, have much less certainty in whether they will still be making money decades down the line.
Yet, Coombs also says companies must use digital strategies to help customers - and that they are as important as shareholders when weighing up many businesses.