Merryn Talks Money Inflation Isn’t Done: Why the Next Shock Could Be Worse
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Mar 20, 2026 Sebastian Lyon, founder and CIO of Troy Asset Management known for inflation-focused portfolio construction. He explains why markets feel calm despite geopolitical shocks. He discusses preparing portfolios for dislocations and prioritising real returns over benchmarks. He outlines drivers of a new sticky inflation regime and why traditional 60/40 approaches and sovereign bonds may no longer protect investors.
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Calm Markets Mask Imminent Dislocations
- Markets look unusually calm despite multiple geopolitical and economic shocks in recent weeks.
- Sebastian Lyon says this calm is deceptive and fund managers must prepare for dislocations like COVID or rapid equity declines to seize opportunities.
Being Underweight Helped During COVID Shock
- Troy was underweight equities into COVID when markets were vulnerable and benefited from lower exposure during the crash.
- Lyon recalls equity fragility pre-COVID and says being prepared lets managers lean in when risk aversion later creates bargains.
Prioritise Real Value Over Benchmark Beating
- Protect real capital first by aiming to maintain purchasing power rather than benchmark outperformance.
- Lyon focuses on inflation-linked targets (historically RPI) and prefers lower volatility even if returns match equity markets over time.
