Two inflation resilient ASX 200 shares revealed: fund manager

Inflation rates in the world’s biggest economy are at 30-year highs.

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A sharp cactus beneath a deflated balloon, indicating the fight against inflation.

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The S&P/ASX 200 Index (ASX: XJO) is down 0.4% in afternoon trade, having recovered some of its earlier, steeper losses.

The ASX 200 is following US and European share markets lower as investors fret over 2 of the biggest concerns that could impact their portfolios in 2022.

Namely the newly emerged Omicron COVID variant, and hot running inflation that looks increasingly likely to be less transient than central bankers were forecasting just a few months ago.

Keeping in line with our headline, we’ll leave COVID-19 aside and maintain the focus on the inflation issue. The issue for investors is that higher inflation could lead to higher interest rates sooner than expected, and impact the relative outlook for almost every ASX 200 share.

In the US, the inflation rate – as measured by core personal consumption expenditures – is up 4.1% year-on-year. That’s running hotter than any time in the past 30 some years.

It’s running higher Down Under as well. As the Australian Financial Review (AFR) notes, futures markets are now pricing in at least 3 interest rate hikes by the Reserve Bank of Australia (RBA) in 2022.

Two inflation resilient ASX 200 shares

Hugh Dive is the chief investment officer at Atlas Funds Management. And he’s keeping a close eye on inflation and the potential for interest rate hikes.

According to Dive (quoted by the AFR), “Rate rises will be a big thing in 2022 and following on from that, we’re definitely seeing inflation through the economy.”

As for the ASX 200 shares that are likely to outperform in a higher inflation and interest rate environment, Dive points to international toll road developer and operator Transurban Group (ASX: TCL), and global packaging giant Amcor CDI (ASX: AMC).

Among the ASX 200 shares which could struggle in this setting, he named Inghams Group Ltd (ASX: ING), the largest integrated poultry producer across Australia and New Zealand.

Dive said:

We’ll be looking at how companies can pass on those price rises. For a company like Transurban it might be easier but for a company like Ingham that’s a much harder conversation. You want things in your portfolio where you can pass those prices on like Transurban and Amcor.

How have Transurban and Amcor been performing?

Both ASX 200 shares have underperformed the benchmark in 2021.

Year-to-date the ASX 200 is up 9.9%. The Amcor share price has gained 8.6% over that same period while the Transurban share price is up 1%.

Amcor also pays a 3.9% trailing dividend yield, unfranked. Transurban pays a 2.7% trailing dividend, also unfranked.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Amcor Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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