Even before the Iran war, Fidelity International portfolio manager Mike Riddell was skeptical of the view that global price pressures were subsiding. His contrarian bet — that inflation was set to rise — is now paying off handsomely.

Months ago, he bought inflation swaps in the US and UK, essentially protection against hotter-than-forecast inflation. That’s because he saw inflation as a potent risk that bond markets — and most of his peers — were underpricing even before the Iran war sent oil prices soaring past $100 a barrel. That bet has helped returns on his two Strategic Bond Funds to surpassed more than 90% of peers, data compiled by Bloomberg show.