The energy transition adds fuel to this inflationary fire. Understanding a portfolio’s exposure to the range of scenarios from here is crucial. Alternatives should be a key tenet within portfolios, helping to get investors on the right side of global mega-trends, reduce equity beta and economic sensitivity, and offer some inflation protection. This repositioning is a difficult exercise that requires careful portfolio construction and manager selection, but one that is likely to be well rewarded in the years to come. 

David Merton is a director at Fulcrum Asset Management