Rising costs push savers into riskier investments

Investors are being pushed towards riskier investments as rampant inflation means they must secure a return above 6pc in order to preserve their wealth.

The cost of living rose by 6.2pc in the year to February as inflation reached a new 30- year high. High inflation combined with government plans to raise taxes will result in a record hit to disposable incomes of £500 per person on average, meaning that many savers will have less money to put into their investments.

Savers must also battle against shaky global stock markets. The S&P 500 index, which tracks America’s largest companies and had previously been a reliable source of returns, has lost 7pc since the start of the year.

Traditional hedges against inflation have also failed to protect investors so far. Consumer goods giants such as Unilever, Reckitt Benckiser and Diageo are often relied on as “safe havens” in inflationary periods because of their perceived ability to pass on rising costs to their customers. However, all three have suffered since January, falling by 15pc, 11pc and 9pc respectively.

Adrian Lowcock, an independent financial commentator, said investors who wanted to protect their portfolio from rampant inflation should turn to the markets that were driving global costs upwards.

He tipped the BlackRock Natural Resources Growth & Income fund. “This is a fund that focuses on mining stocks and oil firms. It owns everything from the oil giant Shell to miner Glencore,” he said.

The fund has benefited from soaring energy prices this year, returning 24pc. In the past three years it has grown by 64pc.

Mr Lowcock also advised investors with a healthy risk appetite to consider investing more money in emerging markets. “This region has suffered because of market falls in China,” he said. “There is likely to be more volatility in this region until there is more clarity around regulation in China’s technology and education sectors. But there is a possible long-term value opportunity here.”

Mr Lowcock tipped the FSSA Asia Focus fund, which has returned 26pc in the past three years.

“It has broader exposure to emerging markets, which makes it a safer way to include China in your portfolio,” he said.