The measure of any portfolio’s strength, however, is in how it is set up to deal with these challenges and Alliance Trust’s managers are confident that the companies they have chosen are resilient.

The firm has also said it is excited by the many value opportunities across the markets.

Andrew Wellington, chief investment officer at Lyrical Asset Management, said: “As the global economy has reopened, demand for goods and services has returned. “Companies are having a difficult time sourcing everything they need to meet that demand, and with those supply shortages we have seen prices rise, driving inflation. The supply chain and inflation issues are difficult challenges for any management team.”

However, Mr Wellington is bullish for the Trust, adding: “For most of the companies in our portfolio, the net result of these challenges has been positive to the bottom line, with higher prices more than offsetting lower volumes and increased costs.”

Bill Kanko, founder and president, Black Creek Investment Management agrees that while the global economy has recovered significantly from the shutdowns imposed by Covid-19, it has done so facing shortages in various products and hiccups in supply chains.

“Material costs have risen and labour costs seem set to rise as well,” says Bill, “With current nominal interest rates well below the inflation numbers, a key challenge will be to determine whether this jump in prices is cyclical and temporary or ongoing. Higher interest rates would be negative for both bond and equity markets. Low interest rates have also caused bubbles to appear in some sectors of the market. As rates rise, these bubbles may burst. We try to steer clear of bubbles.”

Hugh Sergeant, head of value and recovery strategies at River and Mercantile, is sanguine about the growth equity bubble bursting. While acknowledging the challenge of interest rate rises, as monetary policy starts on a path to normalisation, he commented: “This could reduce the return to equities next year but it should be positive for the value equities that we invest in, as rising rates are more supportive of shorter duration value stocks than longer duration growth and quality investments.”

Value will also come from investment in companies that have the pricing power to pass on any increased costs.

Michael Sramek, senior portfolio manager and managing director at Sands Capital, believes that technology and demographics are powerful, long-term disinflationary forces. However, he says it’s possible that we see an overreaction by the Fed and a policy mistake, similar to 2018 (when it raised rates).

He added: “While this could result in short-term equity market volatility, it should not erode the long-term investment cases for our companies. We believe competition, saturation, and regulation are the biggest risks to monitor and the businesses remain in good shape.”