February 15, 2022

Quality investing during inflationary times

Read our article from Clyde Rossuw from Ninety one :


Summary :

There are three core characteristics that insulate quality businesses from the damage inflation can bring: pricing power, low capital intensity, healthy balance sheets.

Pricing power – an attribute achieved through enduring competitive advantages building significant barriers to entry – ensures quality companies can sustain their healthy profit levels.

Capital light businesses will be much less impacted by inflation in required capital expenditure costs than capital intensive businesses.

Having healthy balance sheets – with low levels of debt – puts quality companies in an enviable position of strength should interest rates rise.

We believe such businesses – held across our Quality platform – are well set to drive real shareholder returns irrespective of the macro environment and will continue to do so if prices do rise for a prolonged period.