“We do expect high inflation in the world going forward”
Russia’s key investment fund will focus on areas resistant to inflation, such as technologies and infrastructure
As most of the world’s economies have implemented some kind of support measures to reduce the impact of the global pandemic, inflation risks and expectations have also increased significantly. Thus, it’s important to own cash-generating assets that are “somehow protected against inflation”, considers the head of Russia’s key investment fund.
The Russian Direct Investment Fund (RDIF) plans to invest in artificial intelligence and widen partnerships, says The National adding that the fund expects global inflation to rise amid stimulus packages and monetary easing measures intended to offset the impact of COVID-19. According to the International Monetary Fund (IMF), about $11 trillion has been pumped into economies all over the world as fiscal support so far in addition to monetary policy measures that have amounted to over $6 trillion.
“There is a risk of high inflation for sure given all of the money that has been printed,” says CEO of the RDIF Kirill Dmitriyev. “You see it in the US stock market [...] So, we do expect high inflation in the world going forward.” He considers that infrastructure and other assets that have some element of being protected against inflation are going to be useful [investments] going forward. “We continue to actively invest in technology; we continue to invest in infrastructure.”
The RDIF has about $10 billion in assets under management and $40 billion of commitments from its partners. While the fund, which generally makes equity co-investments, focuses primarily on Russia, forthcoming investments in technology can be outside of Russia and in partnership with sovereign wealth funds and other entities. “We feel that jointly we can make major breakthroughs including in artificial intelligence,” specifies Dmitriyev adding that different areas of technology are highly promising.
However, the RDIF will be very selective in how it invests its money amid the current economic downturn. “We are a conservative investor and understand that the world economy will decline in many parts of the world, steeper than people think, [so] we are not rushing,” explains Dmitriyev. He outlines that his fund wants to make investments “when we feel that our capital helps companies grow [and] recover from some of the difficulties they faced in the coronavirus times”.
The IMF expects the global economy to contract 4,9% this year and predicts a sluggish recovery in 2021. Overall, it estimates the cumulative loss to the world’s economy at more than $12 trillion over two years (2020-2021).