The Equitile Resilience Fund (UK-domiciled) aims to deliver capital growth by investing in large, growing companies in the developed markets. It is managed according to our core investment principles and uses the Equitile Fair Fee Model.
The Equitile Global Equity Fund (Ireland-domiciled ICAV) follows the same strategy and principles as the Equitile Resilience Fund. The lastest update and other documents can be found here.
September has seen a setback for both global equity markets and your fund. In large part this has been caused by growing concerns that central banks will soon need to tighten monetary policy to head off rising inflationary pressures. In effect, governments have spent the last eighteen months stamping on their economies’ brakes, with lockdown regulations, while also stamping on their accelerators, with monetised deficit spending. They have shrunk their real economies but masked the damage with printed money.
In the last few weeks, the inflationary effects of these policies have become apparent, due to supply chain bottlenecks and sporadic labour shortages. Consequently, financial markets have begun to question the willingness of central banks to continue monetary debasement, although we believe it is already too late to escape this cycle - significantly higher interest rates are unlikely to fix supply chain bottlenecks, but they could trigger an economic downturn requiring even more inflationary deficit spending.
As we have been saying for some time, despite its adverse effects, monetary debasement looks to be the least painful path for policymakers from here. So, we expect, when it comes to inflation, central bankers will talk tough but carry a small stick. They will make noises about tightening monetary policy but delay any substantive action for as long as possible. We believe inflation is no longer the policy concern, it is the policy goal.
In our view we are in a bull market for regulation and a bull market for monetary expansion. Taken together, this is a recipe for stagflation. In a stagflationary world, inflation protection and the hunt for pockets of genuine growth become the most important investment objectives. Fortunately, we believe there are still plenty of high-quality, high-growth companies around which will be able to provide real growth even in an increasingly stagflationary economic climate.