What portfolio picks are best for this inflation turning point?

“What’s been happening over the last four or five months is people have been reconsidering the effect of higher interest rates, not just on inflation, but the ability of issuers to pay,” said Castle.

PenderFund is looking at companies one by one to ensure they’re value-backed, and it’s optimistic about how the next year may play out. But, right now, it’s particularly interested in companies with consistent demand, regardless of the state of the economic cycle. One category is companies that register .com domain names as people consistently need those.

“It’s not the kind of thing that is the first cut when a company cuts back,” said Castle, noting it is a utility-type operation with a consistent level of demand with a fair amount of pricing power. “Companies with utility-like demand characteristics obviously have the highest probability to do well.”

So, too, will companies with relatively stable demand, especially when you factor in the yields that they would have to pay to borrow, which could be impacted by the central banks’ rising rates.

At the other end of the spectrum are companies that have a business plan, but are not yet operative as he said, “they need to burn cash for a number of years to get to the point where they earn more money than they spend on expenses.” He noted these kinds of companies, which were in vogue a couple of years ago, may now struggle to find credit investors until they can demonstrate that they’re focused on not just growing revenue, but progressing toward generating cash.