The June inflation figures are out – and they don’t look good. US consumer prices were hotter than expected, hitting a new 40-year high. However, rising rates are unlikely to cool to the Fed’s 2% target — and look set to stay that way for the next few years, Ben Kirby, co-chief investment officer at Thornburg Investment Management, told CNBC’s “Squawk Box Asia” on Tuesday, the day before June inflation data is released. “Inflation will be volatile and generally higher in the next few years than in the last decade; it will oscillate and move without a clear trend line,” added Kirby, co-portfolio manager of the $10 billion Thornburg Investment Income Builder Fund. Kirby predicted a hotter June print than May, in line with economists polled by Dow Jones. Data from the US Bureau of Labor Statistics showed the consumer price index rose 9.1% from a year earlier, up from May’s 8.6% – also a 40-year high. Given the uncertainty surrounding rising prices, Kirby believes investors should strive to have a balanced portfolio. He tells CNBC about some of the “international and high-quality” companies he holds in the Thornburg Investment Income Builder Fund. Stock Picks One of Kirby’s top picks is Visa. He described Visa as an “inflation beneficiary,” benefiting from higher prices for the goods and services consumers use their credit cards for. The company is expected to benefit from a recovery in travel as pandemic restrictions ease, with consumers charging their “relatively expensive” airline tickets to payment companies such as Visa, according to Kirby. Kirby also likes French telco Orange SA as a safe bet that is “attractively valued” — unlike other more expensive defensive plays. “So many defensive companies today are trading at valuations that are well above the market and well above their historical premium to the market. So investors are paying for defense in many countries and in many sectors and many stocks,” he said. Orange, by contrast, trades at a single-digit price-to-earnings (P/E) ratio with a “really attractive” dividend yield and growth prospects, Kirby added. The stock has a trailing 12-month P/E ratio of 8.9, the lowest among key competitors, according to FactSet data. The stock also has a 5-year average dividend yield of 5.3%. Biopharmaceutical company AstraZeneca is another stock Kirby likes. He described the company as “top-tier,” with double-digit sales growth and improving cash flow generation at a relatively attractive valuation. Kirby said the firm boasts a pipeline of 12 potential “blockbusters” — four of which are in the oncology division. “We think these will be big, big drugs for the company and will drive growth over the next few years,” he said. Read More These global stocks have a track record of earnings growth — and analysts love them. Recession is a given, says one investment adviser — and reveals his top stocks to beat it ‘Straight cheap’: JPMorgan says there’s a tactical buying opportunity in these global stocks Banking giant Citigroup is another stock in the fund’s portfolio. Kirby believes the stock is cheap and has “plenty of scope” to increase dividends in the near term as the bank seeks to raise its payout ratio on normalized earnings to its pre-pandemic level. The company is also well-positioned to pursue “attractive and differentiated” growth on the back of higher earnings from rising interest rates and credit card growth in the US, he added. The Thornburg Investment Income Builder Fund had $11.2 billion in assets under management as of May. 31. In addition to Orange, the fund’s largest holdings also include French energy firm TotalEnergies, semiconductor giants Broadcom and Taiwan Semiconductor Manufacturing Company, and British telecommunications company Vodafone. When will inflation peak? Soaring energy and food prices make it difficult to predict with any certainty when inflationary pressures will ease, but Kirby believes it could peak in the next one to three months. “I think there is a lot of pressure for inflation to slow down later in the year, [such as] fiscal tightening, monetary tightening, a strong dollar and commodity prices rolling in because of weak consumers,” he said.