What are the inflation beating asset classes?


In this second paper in our inflation series, we look at the ability of each asset class to hedge inflation and to provide returns above inflation.

We find that:

  • Some asset classes, such as equities, which many believe to be good at hedging inflation, actually provide poor inflation hedging characteristics but strong returns above inflation over the longer term
  • Sub-sectors of commodities and equities, particularly those that are energy and metals related, provide good inflation hedging characteristics and have historically provided strong returns above inflation
  • Some interesting areas worth considering for their inflation hedging properties such as leveraged loans, infrastructure and timberland have limited data and therefore we have evaluated these from a theoretical perspective.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.