The risks of stagflation are on the rise. Duncan Lamont, Head of Strategic Research at Schroders explains the reasons that investors need to reassess how their money is allocated.
With the risks of stagflation – higher inflation coupled with lower growth – on the rise, investors need to reassess how their money is allocated.
Traditional portfolios are likely to be less resilient, although elements remain valid. Subtle changes can improve the odds of a good outcome, while tactical additions have the potential to enhance portfolio efficiency and returns further.
Duncan Lamont, Head of Strategic Research at Schroders concludes in a July 2026 paper that the popular 60/40 portfolio is not dead, but investors can enhance their chances of successful outcomes if the global economy goes in a stagflationary direction of weaker growth and higher inflation.
- Within bond portfolios: shorten duration
- Within equities:
- increase exposure to quality and value styles, to balance growth-heavy exposure in the global market
- increase exposure to the energy sector, using specialist allocations or regional tilts
- increase exposure to defensive sectors and companies
- consider gold equities
- Add allocations to commodities and hedge funds
To read the full paper from Schroders, head here: Adapting asset allocation to the risk of stagflation
Main image: stagflation, arturo-anez-MA1Xobltz5o-unsplash
