For investors worried about inflation, there are a number of strategies that can help mitigate its impact on their portfolio.
The Office for National Statistics last week revealed that inflation rose to 0.7 per cent in October, although it remains below the Bank of England’s target of 2 per cent. 
And while it remains low, Adrian Lowcock head of personal investing at Willis Owen, said October may not be a one-off.
“Inflation has been off investors’ radars for some time, but last month’s surprise jump was above expectations, and it could be a sign of things to come,” he noted.
“Investors should be prepared for a potential rise in inflation over the medium and long term as fiscal stimulus replaces lockdown measures.”
And there are a number of strategies in the toolkit for investors worried about the impact that rising inflation could have on their portfolio.
Lowcock said: “Some assets, including equities, bonds and commodities, can see prices rise much faster than inflation, or provide an income above inflation, and therefore they can be used in portfolios to offset its impact.”
As such, he highlighted three funds he believes could mitigate the impact of inflation over the long term.
BlackRock Gold & General
First up is the £1.6bn BlackRock Gold & General fund overseen by Evy Hambro and FE fundinfo Alpha Manager Tom Holl. It targets long-term returns by investing in companies that derive a significant proportion of their income from gold mining and other precious metals.
Lowcock said: “The focus is on quality companies and the portfolio has a defensive bias, whilst gold has a reputation for protecting against inflation over the longer term.”
Over five years, the fund has made a total return of 170.28 per cent, compared with a 221.17 per cent gain for the benchmark FTSE Gold Mines index.
Performance of fund vs benchmark over 5yrs
Source: FE Analytics
BlackRock Gold & General has an ongoing charges figure (OCF) of 1.17 per cent.
M&G Global Macro Bond
Next up is the $2bn M&G Global Macro Bond fund, overseen by veteran fixed income investor Jim Leaviss and Alpha Manager Claudia Calich.
“Leaviss combines his views on the global economy with stock selection,” said Lowcock. “This flexible approach means he is able to respond to changes in inflation as and when necessary.”
The four FE fundinfo Crown-rated fund invests across a range of different markets and issuers based on in-depth analysis on global, regional and country-specific macroeconomic factors.
It aims to outperform the IA Global Bond sector average over a five-year period, which it has accomplished over the most recent period, with a total return of 43.47 per cent over the peer group’s 34.52 per cent.
Performance of fund vs sector over 5yrs
Source: FE Analytics
The M&G Global Macro Bond fund has a yield of 0.73 per cent and an OCF of 0.78 per cent.
Threadneedle UK Equity Income
Last up is Richard Colwell’s £3.2bn Threadneedle UK Equity Income fund, which invests in UK companies with strong balance sheets and excellent cash flow.
“Equities are able to perform well in a moderate inflationary environment,” said Lowcock. “The focus on dividends means the companies are less sensitive to prices and more able to pass any inflationary impact on through their businesses.”
Colwell’s fund aims to provide income as well as prospects for investment growth over the long term. It targets an income yield higher than the FTSE All-Share index over rolling three-year periods after charges through investing in a concentrated portfolio of UK-listed companies.
Performance of fund vs sector & benchmark over 5yrs
Source: FE Analytics
Over five years, Threadneedle UK Equity Income has made a total return of 25.73 per cent compared with a gain of 13.12 per cent for the average IA UK Equity Income fund and a return of 24.62 per cent for its FTSE All Share benchmark. It has a yield of 3.98 per cent and an OCF of 0.82 per cent.