Macro views

Investing during high inflation

Making sense of the new inflation regime

August 4, 2022 | 14 min read

Todd Jablonski, CFA

Chief Investment Officer & Global Head of Multi-Asset and Quantitative Investments

Seema Shah

Chief Global Strategist

The Federal Reserve (Fed) was caught behind the curve, and will need aggressive rate hikes to slow demand, and thus, inflation. Maintain neutral risk, but seek high quality, defensive assets.

Executive summary

The Fed is playing catch up

With inflation seemingly reaching new 40-year highs each month, the Fed finds itself woefully behind the rate hiking curve. Though price pressures were initially attributed to “transitory” supply/demand imbalances, repeated negative supply shocks and strong demand have allowed price pressures to broaden and accelerate.

Policy tightening is needed to regain price stability

Some price pressure will ease naturally without Fed intervention. As time and inflation deteriorate household savings and sentiment, especially for the lowest income demographic, consumer demand may soften, and labor supply may expand—limiting both price and wage inflation. However, geopolitical conflict may still weigh on energy, food, and goods supply, causing CPI (consumer price index) inflation to still be elevated above 6% by end 2022, before a recession could reset prices to target by end-2023.

Long term inflation expectations are still anchored around the Fed’s inflation target, which means the inflation fight is not yet lost. However, the Fed will need to be aggressive with its tightening process, continuing to hike at an aggressive pace and carrying interest rate increases into 2023.

Investment implications:

Slower growth: As the Fed fights inflation by dampening demand, seek out high quality firms that can still deliver solid earnings during tighter financial conditions.

Inverted yield curve: Aggressive near-term tightening raises short rates, and as slower growth caps long rates, bank stocks may come under pressure.

Less pricing power: As consumers become more deliberate with purchases, firms with lower pricing power, like small-caps, may struggle passing on higher costs. Mid-cap firms may have better pricing power, and their exposure to the domestic U.S. economy, which is likely to outperform other global markets, presents a sweet spot.

Elevated inflation: Inflation’s eventual descent to the Fed’s 2% target may take many quarters. In the meantime, both equities and fixed income could be challenged, setting up real assets for potential outperformance.

The current inflation situation

A Fed caught behind the curve

With inflation reaching fresh 40-year highs, and the fed funds rate still accommodative, it is apparent that the Fed has been caught behind the curve. However, the Fed has finally recognized its erroneous read of the inflation situation and is now desperately playing catch-up.

Spooked by sizzling CPI reports and rising consumer inflation expectations, coupled with signs of continued strength in the labor market, the Fed raised policy rates by 75 bps in June and by 75 bps in July.

In the space of five months, market expectations for policy rate tightening in 2022 moved from 200 bps as of March 2022 to 330 bps as of early August 2022. Furthermore, the Federal Reserve itself expects further tightening next year.

Consumer price index
Year-over-year, 1960–present. Data as of July 13, 2022.

Line chart showing the consumer price index, year over year from 1960-2022

Bureau of Labor Statistics, Principal Global Asset Allocation. Core CPI excludes the often volatile food and energy prices. Data as of July 13, 2022.

Implied fed funds target rate and market expectations
FOMC member projections & fed funds futures

Chart displaying FOMC member projections and fed funds futures from 2022 to the end of 2024

Bloomberg, Federal Reserve, Principal Global Investors. Data as of August 2, 2022.

While long-term inflation expectations are still anchored, the Fed needs to regain credibility with brisk policy normalization.

How transitory became persistent

Scarred by two decades of uncomfortably low inflation and even deflation concerns, the Fed initially didn’t believe inflation would rise meaningfully and sustainably above its 2% target. This erroneous read of the inflation situation is resulting in a more aggressive pace of monetary tightening today.

In the Fed’s defense, when inflation started to surge in the first half of 2021, it was concentrated in categories that had seen supply/demand imbalances arise out of the pandemic. However, multiple COVID shocks hindered full healing in goods and labor supply. Indeed, it wasn’t until late fall 2021 that freight rates showed tentative signs of topping. As a result, supply remained tight, and goods prices elevated.

The global economy faced another inflation shock in early 2022 as a result of the Russia/Ukraine conflict, which disrupted exports of oil, natural gas, coal, grains, oilseeds, and fertilizer—sending energy and food prices soaring.

With goods inflation more persistent than anticipated, plus the addition of food and energy inflation, price pressures have broadened out and become sticky.

Global freight rates
Rates per 40-foot box, thousands, January 2020–present

Line graph showing global freight rates per 40-foot box from January 2020 to August 2022

Bloomberg, Principal Global Asset Allocation. Data as of July 28, 2022.

Commodity price movement
Rebased to 1 at invasion of Ukraine on February 24, 2022

Line graph showing commodity price movement, rebalanced to 1 at invasion of Ukraine on Feb 24, 2022 to August 1 2022

Bloomberg, Principal Global Asset Allocation. Data as of August 1, 2022.

Repeated negative supply shocks and strong demand exacerbated supply/demand imbalances, causing inflation pressures to become persistent.

Inflation's path forward

Some price pressures will ease naturally

While fiscal stimulus during the pandemic increased consumer demand, and both generous unemployment benefits and rising asset prices reduced labor supply, these wealth impacts have faded. Higher prices are now eating into household budgets, forcing sidelined workers back into the work force, and should help to cap wage inflation.

Already, high prices are weighing on consumer sentiment. The University of Michigan consumer survey suggests intentions to purchase vehicles and household durable goods are at the lowest in history. Anecdotes from corporate earnings calls confirm that the U.S. consumer has become more discerning with their purchases, a tentative sign that softer demand may soon outweigh limited supply, easing price pressures.

Commodity price inflation may also ease in coming months as recession fears grow. With this, headline inflation should soon peak and start its downward trend.

Real cash holdings by household net worth
Level, rebased to 1 at December 31, 2019.

Line graph showing real cash holdings by household net worth from December 2019 to June 2022

Bloomberg, Federal Reserve Distributional Financial Accounts, Principal Global Asset Allocation. Cash includes checkable deposits, currency, short-term investments, and money market fund shares. Nominal cash is deflated by headline CPI index. Data as of June 30, 2022.

Buying conditions
Level, 100 = neutral sentiment, University of Michigan consumer sentiment survey, recessions are shaded, 1960–present

Line graph showing buying conditions based on a University of Michigan consumer sentiment survey, from 1960 to 2022

As high prices weigh on savings and sentiment, consumer demand may soften, and labor supply may expand—limiting both price and wage inflation.

Nonetheless, quick and steady rate hikes are needed

Even with inflation close to its peak, the Fed needs steady rate hikes to tighten exceptionally accommodative financial conditions, and thus rein in inflation by dampening demand.

More importantly, it remains crucial that the Fed clamps down on inflation expectations before they rise too far and become unanchored.

Currently, inflation breakevens imply that longer-term expectations are still anchored, with the spike in expectations contained to the near-term. However, without continued action from the Federal Reserve, inflation expectations could drift higher, threatening long-term price stability.

Although the Fed hasn’t lost the inflation fight, it must continue to tighten policy.

U.S. breakeven inflation
2016–present

Line graph showing U.S. breakeven inflation rate from 2016 to 2022

Bloomberg, Principal Global Asset Allocation. Data as of August 2, 2022.

While long-term inflation expectations are still anchored, the Fed needs to regain credibility with brisk policy normalization.

…and stubborn prices mean an aggressive Fed

While recent easing in food and energy prices should provide some relief for the next few CPI readings, inflation may remain uncomfortably high.

House price appreciation has yet to peak and typically takes 18 months to flow into shelter inflation (worth around 1/3 of the CPI basket). This component of CPI will likely be elevated for some time.
Excluding shelter, core services is currently being bolstered by summer vacation spending. While pressures may reduce in the autumn, a spending shift from goods to services is also characteristic of the post-COVID lifting of restrictions.
Durable goods (like transportation commodities) have shown surprising resilience to weakening growth. However, as recession approaches and households cut discretionary spending, this category is most vulnerable to deflationary pressures.

Shelter and non-essential goods/services have traditionally been more responsive to monetary policy. As rate hikes have generated slow progress thus far, the Fed must continue hiking aggressively if it wants to get a handle on the inflation problem.

Contribution to headline inflation
Year-over-year, 2015–present
* Core measures excludes the oft-volatile food and energy prices

Chart displaying the contribution to headline inflation, year over year from 2015-2022

Bureau of Labor Statistics, Principal Global Investors. Data as of July 13, 2022. * Core measures excludes the oft-volatile food and energy prices.

Inflation is expected to fall, but slowly. Stubborn prices means the Fed will need to hike even more aggressively.

Investment implications

Neutral risk, but with a defensive tilt

The Fed is committed to controlling prices, even at the risk of speeding up a recession. The front-loaded hiking path puts upward pressure on the short-end of the curve, whereas slower growth significantly limits any upside potential for 10-year U.S. Treasury yields. As such, the 10- year/3-month yield curve—an important recession indicator—is likely to invert by the end of 2022. Rate hikes during early 2023 will drive the front-end higher but, by end-2023, with the Fed embarking on rate cuts to support the economy, the front-end will likely dip back.

Slowing growth and Fed policy inverting the yield curve are challenging the current investment environment. However, opportunities for investors still exist.

Equities: The U.S. economy is slowing rapidly. However, the outlook is far worse for Europe and large parts of emerging markets. U.S. mid-caps are in the size sweet spot—more domestically focused than large-caps, yet better pricing power than small-caps.

Fixed income: 10-year rates, and therefore duration risk, have likely peaked. As such, U.S. Treasurys and securitized debt are likely better positioned for the oncoming recession.

Alternatives: Real assets remain an attractive inflation hedge.

U.S. 10-year Treasury yield curve
Current yield curve vs. forecasts

Line graph showing U.S. Treasury yield curve from today vs. forecasted 10 years out

Bloomberg, Principal Global Asset Allocation. Yield curve forecasts are PGAA forecasts. Data as August 2, 2022.

Against the challenging backdrop, it is important to diversify portfolios with high-quality assets.

Hedging for inflation

Though food and energy prices remain a wildcard, inflation is likely near the peak. However, it may take multiple quarters (and a recession) for prices to normalize near the Fed’s inflation target.

In the meantime, real assets may provide a hedge against elevated inflation. Though returns from commodities and infrastructure may be volatile, they historically outperform in inflationary environments, and help diversify equity exposure. Treasury inflation protected securities (TIPS) also work as an inflation-resilient diversifier.

Ultimately, holding a diversified basket of real assets can provide inflation mitigation with lower volatility than holding commodities or infrastructure alone.

Major asset class inflation sensitivity
Correlation to 12-month rolling CPI, volatility is annualized, January 2003–present

Graph showing major asset class inflation sensitivity by correlation to 12-month rolling CPI, from 2003-2022

Bloomberg, Principal Global Asset Allocation. Inflation sensitivity is the correlation of the 12-month rolling CPI-U non-seasonally adjusted and the particular asset class. Volatility is annualized monthly returns. Data is for the time period of January 1, 2003 to May 31, 2022, except Diversified Real Assets which started in January 2010.

¹ Represented by the Principal Diversified Real Asset fund.

Though inflation is likely near the peak, investors may want to preserve portfolios against still-elevated inflation.

Disclosure

Risk considerations

Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or protect against a loss. Equity investments involve greater risk, including higher volatility, than fixed-income investments. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. Potential investors should be aware of the risks inherent to owning and investing in real estate, including value fluctuations, capital market pricing volatility, liquidity risks, leverage, credit risk, occupancy risk and legal risk. Commodities generally are volatile and not appropriate for all investors. Inflation and other economic cycles and conditions are difficult to predict and there Is no guarantee that any inflation mitigation/protection strategy will be successful. Treasury inflation-protected securities (TIPS) are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation in order to help investors from a decline in the purchasing power of their money. As inflation rises, rather than their yield increasing, TIPS instead adjust in price (principal amount) in order to maintain their real value. Investments in companies involved in agriculture, infrastructure, natural resources and energy can be significantly affected by government policies, regulations, interest costs, surplus capacity, weather conditions, and natural disasters. Investing in derivatives entails specific risks relating to liquidity, leverage, and credit, which may reduce returns and/or increase volatility.

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"Principal Financial Group is a global organization that operates in many different jurisdictions worldwide. Principal Financial Group’s diversified group of companies and affiliates provide comprehensive asset management solutions for institutional investors, investment funds and individuals in key markets around the world. Principal Financial Group has investment offices in the United States, [Mexico, South America, Europe, the Middle East, and throughout Asia]. Where appropriate, Principal Financial Group entities are registered with appropriate regulatory authorities in the jurisdictions in which they are required to be registered to carry on their respective business activities.

All products or services provided to you by any Principal Financial Group company shall only be available in the jurisdiction(s) within which the company providing the product or service is authorized to operate. The relevant Principal Financial Group company reserves the right to make the final determination on whether or not you are eligible for any particular product or service. If you choose to enter a website outside your country of residence, you are advised that it may not be legal in that jurisdiction for you to access or use the facilities available on that Site and the legal requirements of that jurisdiction may prohibit you from dealing or otherwise transacting in that jurisdiction.

Principal Financial Group makes no representation that the content of the site is appropriate for use in all locations, or that the transactions, securities, products, instruments or services discussed at this site are available or appropriate for sale or use in all jurisdictions or countries, or by all persons and entities. Nothing on this website shall be considered a solicitation for the offering of any investment product or service to any person in any jurisdiction where such solicitation or offering may not lawfully be made.

You may view, download for caching purposes only, and print content from the website for your own personal use, subject to the restrictions set out below and elsewhere in these Terms of Use.

No Guarantee of Timeliness
This website may contain videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions. The information and materials contained on this website, and the terms, conditions, and descriptions that appear, are subject to change. All content on this website is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.

No Warranties
The information on this website has been developed internally and/or obtained from sources believed to be reliable; however Principal Global Investors and its affiliates do not independently verify or guarantee its accuracy or validity. The information and services provided on this website are provided ""AS IS"" and without warranties of any kind, either expressed or implied. To the fullest extent permissible pursuant to applicable law, Principal Global Investors disclaims all warranties, including, but not limited to, any warranty of non-infringement of third-party rights and any implied warranties of merchantability and fitness for a particular purpose. Principal Global Investors does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained on this website and does not warrant that the functions contained in this website will be uninterrupted or error-free, that defects will be corrected, or that the website will be free of viruses or other harmful components. Principal Global Investors expressly disclaims all liability for errors and omissions in the materials on this website and for the use or interpretation by others of information contained on the website. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions on this website.

If you have questions, please email us.

Click ""Accept"" to indicate your acknowledgement and acceptance of Principal Global Investors Terms of Use and to continue."

"These Terms & Conditions explain certain legal and regulatory conditions and restrictions in relation to the Principal Global Investors (Europe) Limited website, and in relation to the Principal Global Investors Funds (‘the Funds’). This information may be changed by Principal Global Investors at any time without notice.

In these terms and conditions, references to 'Principal Global Investors' means Principal Global Investors (Europe) Limited or any affiliate of the Principal Financial Group, Inc. or Principal Global Investors, LLC.

Before you proceed, you must acknowledge that you have read, and agree to, our terms and conditions.

Information in relation to the Principal Global Investors Funds is available through this web site to institutional investors resident in the following countries of: Belgium, France, Finland, Germany, Guernsey, Ireland, Italy, Jersey, Netherlands, Spain, Sweden, Switzerland and the United Kingdom. By proceeding this far you are representing and warranting that you are an institutional investor resident in one of these countries. Not all of the Funds are available in all these jurisdictions, and investors are directed to the Country Registration document for detailed information . What follows is not an offer or invitation to acquire an investment to, and should therefore not be relied upon by, any person anywhere other than the countries noted. Persons in respect of whom such prohibitions apply must not access this web site. This web site is reserved exclusively for non-U.S. persons and should not be accessed by any person in the United States.

Yes, I certify to be an institutional investor and resident of a country listed above.

Cookies
Use of cookies on this site is outlined in the Privacy and Security Policy. In accepting these terms and conditions, you accept the terms of the Cookie Policy and the use of cookies from this site.

Legal Entity Disclosure and Regulation
In Europe by Principal Global Investors (EU) Limited, Sobo Works, Windmill Lane, Dublin D02 K156, Ireland. Principal Global Investors (EU) Limited is regulated by the Central Bank of Ireland.

In the United Kingdom by Principal Global Investors (Europe) Limited, Level 1, 1 Wood Street, London, EC2V 7 JB, registered in England, No. 03819986, which is authorised and regulated by the Financial Conduct Authority (“FCA”).

In Switzerland by Principal Global Investors (Switzerland) GmbH. This website is considered as advertising and information contained herewith be treated as such. Investors can obtain free of charge the prospectus, trust deed, the prospectus, the key investor information document (KIID), and the annual and semi-annual reports from the representative in Switzerland.

In Europe and United Kingdom, this website is directed exclusively at Professional Clients and Eligible Counterparties and should not be relied upon by Retail Clients (all as defined by the MiFID and FCA respectively). If you are viewing the material as a retail investor, you should seek independent investment advice before deciding whether the products and services in question are suitable to meet your investment needs and objectives, as the language has not been complied to a retail client standard.

Principal Global Investors Funds
Principal Global Investors (Ireland) Limited is the issuer of the Funds. Investments may only be made on an application form attached to a current prospectus and following receipt by the investor of the KIID in respect of the Fund in which they intend to invest. The latest version of the prospectus of the Funds is dated 14 December 2012.

For Real estate investors in the European Economic Area (“EEA”), this website and the information on it is only directed at persons who are professional investors for the purposes of the Alternative Investment Fund Managers Directive (2011/61/EU) (“AIFMD”), professional clients or eligible counterparties for the purposes of the Markets in Financial Instruments Directive (Directive 2014/65/EU) (“MiFID II”) or as otherwise defined under applicable local law and regulation and at whom this website and the information on it may lawfully be directed in any relevant jurisdiction (“Eligible Persons”). In relation to each member state of the EEA (“Member State”) which has implemented AIFMD (and for which transitional arrangements are not/ no longer available), this website may only be accessed and interests in Funds may only be offered or placed in a Member State to the extent that: (i) the relevant Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD (as implemented into the local law/regulation of the relevant Member State); or (ii) this website and its information may otherwise be lawfully distributed and the interests in Funds may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). In relation to each Member State of the EEA which, at the date of accessing this website, has not implemented AIFMD, this information may only be distributed and interests in Funds may only be offered or placed to the extent that this information may be lawfully distributed and the interests in Funds may lawfully be offered or placed in that Member State (including at the initiative of the investor).

Persons who are not Eligible Persons, including but not limited to those individuals or other persons who fall within the FCA’s definition of ‘retail clients’, should not use or rely upon this website or the information contained therein and may not engage the services of Principal Real Estate or any of its affiliates, or invest in any Fund. Potential investors are advised that all or most of the protections provided by the UK regulatory system will not apply and that the UK Financial Services Compensation Scheme may not be available in relation to an investment in a Fund or separate account.

The contents of this website have not been verified or approved by any competent regulatory or supervisory authority. No liability, whether in negligence or otherwise, arising directly or indirectly from the use of the information or any part of it on this website is accepted and no representation, warranty or undertaking, whether express or implied, is or will be made at any time by Principal Real Estate or its affiliates or any of their respective advisers, directors, officers, employees, representatives or other agents (“Principal Agents”) for any information or any of the opinions contained herein or for any errors, omissions or misstatements.

None of Principal Real Estate or its affiliates or any Principal Agents makes or has been authorised to make any representation or warranties, whether express or implied, in relation to Principal Real Estate or regarding the truth, accuracy or completeness of any of the information contained on this website at any time. No representation or warranty is given by Principal Real Estate, its affiliates or the Principal Agents as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in the information on this website. Furthermore, nothing contained on this website is or should be relied on as a promise or representation as to the future. No reliance may be placed by any person for any purpose whatsoever on the information or opinions contained on this website or on its completeness, accuracy or fairness at any time.

Principal Global Investors (Europe) Limited is not authorised by the FCA to directly deal with retail investors; any distribution of the Fund to retail investors in Europe is facilitated by fund distributors with which Principal Global Investors (Europe) Limited has entered distribution arrangements, pursuant to advice provided to investors by those distributors, based on the documents Principal Global Investors (Europe) Limited provides. Retail investors should not be provided with access to this website.

The name of the Swiss representative is ACOLIN Fund Services AG, Stadelhoferstrasse 18, CH-8001 Zürich. The name of the Swiss paying agent is Banque Cantonale de Genève, 17, quai de l’Ile, 1204 Geneva. Investors can obtain the prospectus, trust deed, the simplified prospectuses and the annual and semi-annual reports free of charge from the representative in Switzerland.
The value of units and the income from them may fall as well as rise.

Investments in the Funds are neither insured nor guaranteed by the US Government or the Federal Deposit Insurance Corporation and are not deposits or obligations of, or guaranteed by, Principal Global Investors.

No Solicitation
Nothing contained in this website shall constitute an offer or solicitation, in relation to units in the Funds or generally, in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised.

In particular, shares issued by the Company, and units in the Funds, have not been and will not be registered under the United States Securities Act of 1933 as amended or the securities laws of any state or political subdivision of the United States and may not, except in a transaction which does not violate US securities laws, be directly offered or sold in the United States or to any US Person. The Company will not be registered under the United States Investment Company Act of 1940 as amended.

This website is reserved exclusively for non-US persons and should not be accessed by any person in the United States.

No Investment Advice
The information in this website contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such nor should it be construed as specific investment advice, an opinion or recommendation. The general information it contains does not take account of any investor’s investment objectives, particular needs or financial situation, nor should it be relied upon in any way as a forecast or guarantee of future events regarding a particular investment or the markets in general. Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision.

You should also inform yourself as to (a) the possible tax consequences, (b) the legal requirements and (c) any foreign exchange restrictions or exchange control requirements which you might encounter under the laws of the countries of your citizenship, residence or domicile and which might be relevant to any investment, including the subscription, holding, transfer or disposal of units in the Funds

Delegation of Investment Management to Affiliates

Products upon which composite results contained in this material, if any, are based may not themselves be available in the United Kingdom and certain other jurisdictions; however, the underlying investment management capability can be made available to institutional investors subject to all applicable local regulations and restrictions. In connection with its management of client portfolios, PGIE may delegate management authority to affiliates that are not authorised and regulated by the Financial Conduct Authority. In any such case, the client may not benefit from all protections afforded by rules and regulations enacted under the Financial Services and Markets Act 2000.

Disclaimer
The information on this website is given by Principal Global Investors in good faith and has been derived from sources believed to be reliable and accurate as at their date. However, Principal Global Investors makes no representation or warranty of any kind for the accuracy or completeness of the information and it is under no obligation to update or correct any errors in the information after the date of publication. This website also contains videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions.

Subject to applicable law, Principal Global Investors and its affiliates and their respective directors, employees and associates do not accept any responsibility arising in any way (including by reason of negligence) for errors in, or omissions from, the information and do not accept any liability for any loss or damage, however caused, as a result of any person relying on any information on the website or being unable to access the website.

The Internet is not a totally reliable and secure medium of communication. Principal Global Investors accepts no liability for the security or confidentiality of information transmitted in this way and any such transmission of information shall be at your own risk.

The entire content of this website is subject to copyright with all rights reserved. You may not copy, reproduce, distribute or modify the content of this website without the prior written permission of Principal Global Investors.

No instructions for investment purposes will be accepted directly from this website or by e-mail.

If you accept these terms and conditions, click ""Accept."""

You are about to leave PrincipalAM.com and be directed to our Japanese site, PrincipalGlobal.jp. If you wish to proceed, please click "Accept." If you would like to stay on PrincipalAM.com, please click "I do not accept."

You may view, download for caching purposes only, and print content from the website for your own personal use, subject to the restrictions set out below and elsewhere in these Terms of Use.

No Guarantee of Timeliness
This website may contain videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions. The information and materials contained on this website, and the terms, conditions, and descriptions that appear, are subject to change. All content on this website is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.

No Warranties
The information on this website has been developed internally and/or obtained from sources believed to be reliable; however Principal Global Investors and its affiliates do not independently verify or guarantee its accuracy or validity. The information and services provided on this website are provided ""AS IS"" and without warranties of any kind, either expressed or implied. To the fullest extent permissible pursuant to applicable law, Principal Global Investors disclaims all warranties, including, but not limited to, any warranty of non-infringement of third-party rights and any implied warranties of merchantability and fitness for a particular purpose. Principal Global Investors does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained on this website and does not warrant that the functions contained in this website will be uninterrupted or error-free, that defects will be corrected, or that the website will be free of viruses or other harmful components. Principal Global Investors expressly disclaims all liability for errors and omissions in the materials on this website and for the use or interpretation by others of information contained on the website. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions on this website.

If you have questions, please email us.

Click ""Accept"" to indicate your acknowledgement and acceptance of Principal Global Investors Terms of Use and to continue."

"Principal Global Investors, LLC, the issuer of this website, is a branch registered in the Dubai International Financial Centre and is authorized by the Dubai Financial Services Authority as a representative office.

This website contains general information only on investment matters and nothing in this website is intended to constitute or form part of any offer or inducement to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE (including the Dubai International Financial Centre) and accordingly should not be construed as such. Information in this website is not directed at you if we are prohibited by any law of any jurisdiction from making the information on this site available to you and is not intended for any use that would be contrary to local law or regulation. Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be available in all jurisdictions. Accordingly persons are required to inform themselves of and observe any such restrictions.

The information in this website is being made available on the basis that the recipient acknowledges and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, the Dubai Financial Services Authority or any other relevant licensing authority or governmental agency in the UAE or elsewhere in the Middle East.

The information in the following website should not be construed as investment advice or a recommendation for the purchase or sale of any security. The value of investments and the income from them may fall as well as rise. Principal Global Investors, LLC and the other member firms of Principal Global Investors (collectively, the ""Firms"")* do not guarantee any investment results and there can be no assurance that the strategies employed will improve investment performance, and make no guarantee that a client's investment objectives will be achieved and no warranties or representations, expressed or implied, are made by the Firms concerning the benefits of these strategies discussed herein. The information in this website has been developed internally and/or obtained from sources that the Firms believe to be reliable; however, the Firms do not guarantee the accuracy, adequacy or completeness of such information and are not responsible for any errors or omissions. This website also contains videos where the comments were valid on the date the video was recorded. Markets move continuously and you should only rely on current information for any investment decisions.

This website contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. The information it contains does not take account of any investor's investment objectives, particular needs or financial situation. Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision.

Nothing in this website should be construed as investment, tax, legal or other advice.

The content of this website has not been approved by or filed with the UAE Central Bank or Dubai Financial Services Authority.

Access to this website is only permitted for ""sophisticated institutional investors/professional clients"". If you are not a ""sophisticated institutional investor/professional client"", you may not access this website and you should select the ""Decline"" link below.

By selecting the ""Accept"" button below, and entering this website, you agree to these terms and confirm and represent that you are a "" sophisticated institutional investor/professional client""."