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Robeco’s Scenario Analysis Tool

Visie To support our clients we developed the Robeco Scenario Analysis Tool, which analyzes specific historical or expected future scenarios and the impact on an investment portfolio. In the figure below, for example, we show the output of the Robeco Scenario Analysis Tool to gauge the consequences of a potential scenario in which price inflation gradually increases and peaks at 9% per year. As an illustration, we assume a scenario in which interest rates also reach the level of 9% and stock returns are on average about 9% per year. The figure indicates the development in nominal value of a traditional portfolio (global equities, nominal bonds and cash) and a portfolio with an inflation-tilt, for example, through an allocation towards commodities and inflation-linked bonds.

The inflation-tilted portfolio offers the investor more compensation for inflation because of the allocation towards inflation-sensitive asset classes. The starting capital is set at EUR 100. If inflation quickly increases, as was used in this scenario for the 2012-2014 period, the inflation-tilted portfolio clearly performs better than the traditional portfolio in this scenario. The broad story is that the inflation-tilted portfolio has the potential to offer investors protection during periods of high inflation.

Figure: Robeco Scenario Analysis Tool: development of a traditional (default) and inflation-tilted portfolio
robecos-scenario-analysis-tool.jpg
Source: Robeco

If you are interested in the impact of inflation on your investment portfolio, please get in touch with your sales or account manager at Robeco. We are happy to show you the tool and any possible solutions in line with your expectations and preferences.
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