Source: Bloomberg, as of 9/30/18. The S&P 500 Index includes 500 leading U.S. companies capturing approximately 80% coverage of available U.S. market capitalization. It is not possible to invest directly in an index. Past performance may not be indicative of future results.
That is why we believe that, regardless of the market environment, a strategic allocation to asset classes that potentially hedge against the risk of unanticipated inflation, without sacrificing total returns, is crucial.
The need for protecting the ‘real’ value is becoming increasingly important as signs of inflationary pressure mount. With trade war talk and tight labor market conditions, inflation may become crucial for investors, thus increasing the importance of protecting the impact that inflation can have on an overall portfolio.
Bottom Line
In the short run, it is easy to ignore the impact of inflation, particularly in today’s market environment, underscored by low costs of capital and improving economic conditions. However, over the long-run, the threat inflation poses to the majority of traditional investments not only requires attention, but importantly, it may necessitate a shift in thinking when it comes to making asset allocation decisions.
We believe a comprehensive real assets strategy is among the most effective and efficient ways to gain defensive exposure to securities that have historically generated attractive risk-adjusted total returns throughout various market cycles while also protecting against rising inflation. To learn more about this approach, and how it may be able to help address inflation concerns, please make sure to visit our real assets center for additional information or read: Real assets 101: key characteristics investors need to know.