With a new year, the ASX now seems to be in the grip of some new fears. As most investors would be aware, 2022 hasn't been the easiest start to the year. As it stands today, the ASX 200 remains down more than 6.3% in 2022 so far. Why such a disappointing beginning to the year? Inflation concerns have arguably stoked many of the uncertainties we've seen across investing markets recently.
Inflation has indeed been on the rise. Just last week, we heard from the Reserve Bank of Australia (RBA) which told the public that inflation was running hotter than it predicted just a few months ago. Seeing as inflation can erode the wealth of all investors, this has understandably prompted some concerns.
So how does one position an ASX share portfolio to beat inflation? Let's check out the ideas of one investing expert.
Jason Beddow is the managing director of listed investment company (LIC) Argo Investments Limited (ASX: ARG). According to reporting in the Australian Financial Review (AFR) this week, he recently gave an interview discussing the current inflationary environment. Mr Beddow reckons the gains we have seen over the ASX the past 18 months or so are unlikely to be repeated. That's given the "extreme stimulus" in response to the COVID-19 pandemic is winding up.
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ASX expert picks shares to beat inflation
As such, Beddow says that Argo is "moving up the safety scale a bit".
"I think you've got to be in the bigger, quality stocks," he stated.
So how does one position a portfolio in such an environment when inflation is of major concern? With those same larger, higher-quality companies, according to Beddow. He names CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), and BHP Group Ltd (ASX: BHP) as great places to start.
But Beddow also reckons ASX 200 energy companies like Santos Ltd (ASX: ATO) and Woodside Petroleum Limited (ASX: WPL) are also worthy of a look. Beddow says that demand for oil and gas "should be strong for more than a decade" and those companies are likely to be "solid performers as inflation rises and investment returns are harder to come by". He says packaging company Amcor (ASX: AMC) is also in the same boat.
Beddow also names the big banks, like Commonwealth Bank of Australia (ASX: CBA), as shares that "should be reasonable investments over the next year". That's due to the "traditional rule of thumb [that] their net interest margin would benefit from rising interest rates".
Mr Beddow's comments come as Argo reported its half-year financial earnings his morning. As my Fool colleague Bernd covered at the time, Argo reported a 91.5% rise in earnings per share (EPS), as well as a 14.3% rise in its interim dividend. Over the period, Argo topped up its investments in Macquarie, CSL, and EML Payments Ltd (ASX: EML). It unloaded positions in Boral Limited (ASX: BLD), AGL Energy Limited (ASX: AGL), and Crown Resorts Ltd (ASX: CWN).
