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Mark Gilbert

Two Fund Behemoths Say Inflation Is Here to Stay

Navigating the rising interest-rate environment makes financial markets trickier than they’ve been for years. 

Expect plenty of financial-market swings this year.

Expect plenty of financial-market swings this year.

Photographer: paul mansfield photography/Moment RF

As Wall Street’s analysts race to outdo each other in predicting how far the Federal Reserve will go in driving up borrowing costs, two of the world’s biggest asset managers have concluded that inflation won’t be transitory. It looks like making money in financial markets will become more challenging for traders who’ve grown accustomed to central bank largesse. With the trend that’s been your friend in recent years becoming less reliable, safe refuge will prove difficult to find. 

Nicolai Tangen, the former hedge fund owner who now runs the world’s biggest sovereign wealth fund for Norway, told Bloomberg Television last week that inflation “will remain high for a long time.” Given that backdrop, he said the $1.3 trillion fund will struggle to match its historical gains. Last year it gained 14.5%, compared with average annual returns of 6% in the past quarter of a century.