By Davide Barbuscia

NEW YORK, (Reuters) – Ruffer Investment Management, a British fund manager is currently in discussions with institutional investors in order to grow a newly launched U.S. investment vehicle. Ruffer executives claim that it expects to reach $5 billion in assets in the next five-years.

Ruffer is most likely to allocate to inflation-linked bond funds, Investment Director Jenny Renton stated. Ruffer is long convinced that the markets must navigate higher structural inflation and is therefore appealing to U.S. investors.

Renton, in an interview Monday, stated, “The timing was perfect, our story resonated, and our worries about inflation and volatility were resonating.”

Renton reported that Ruffer’s assets are worth 26.2 billion pounds (32.70 trillion dollars) according to its website. In January, Renton launched an American investment vehicle now worth 500 million.

In recent months, U.S. consumer price inflation has been at its fastest rate in many decades. This led to the Federal Reserve raising rates and reducing its balance sheet in an effort to cool down the economy. This change in the Federal Reserve’s previously supportive monetary stance is weighing on nearly all asset classes within financial markets in this year.

Renton stated that “our core structural view” that has been held since a long time was that there is a transition to higher inflation and yields that are below inflation.

Renton stated, “More importantly in the short-term, we’re going see inflation volatility.”

Global central banks are rapidly withdrawing stimulus measures. This has led to liquidity problems in financial markets, including in the US Treasury market worth $20 trillion. It also contributed to volatile intra-day yield swings.

Renton explained that central banks would not be able tighten inflation conditions enough to reduce inflation to 2%. Renton believes in reality, however, that inflation targets may move.

($1 = 0.8013 pounds)