UK's Armstrong taps inflation fears with 1st fund

* Targeting return of inflation plus 7 percent

* Currently taking large bets on commodities and credit

By Claire Milhench

LONDON, Nov 12 (Reuters) - Armstrong Investment Management, the boutique headed by husband-and-wife team Patrick and Dr Ana Cukic Armstrong, is launching its first product, seeking to tap into investor concerns over the prospect of rising inflation.

The Armstrongs, previously co-heads of Lloyds (LLOY.L) unit Insight's multi-asset group, have managed money together for over nine years, building products at UBS (UBSN.VX) and Insight.

The multi-asset Diversified Dynamic Solution (DDS) fund, their firm's first and flagship offering, will try to deliver an average total return of at least euro zone CPI plus 7 percent per annum over a seven year cycle.

"In the past these types of products have tried to beat a cash rate but now clients really want products that can outperform inflation," said Ana Cukic Armstrong.

She said money supply in the UK and U.S. was growing much faster than the official numbers implied. "It looks like there might be more inflation in the system than expected."