Navigating Inflation: Proven Strategies to Protect and Grow Your Wealth
Where Markets Meet Macro
Inflation has returned to the forefront of economic concerns, reminding investors of its potential to erode purchasing power and disrupt markets. As we face heightened inflation risk, understanding how to safeguard and grow your portfolio becomes crucial. Recent research by Henry Neville, Teun Draaisma, Ben Funnell, Campbell R. Harvey, and Otto van Hemert provides invaluable insights into the best strategies for inflationary times. This article explores their findings to help you navigate these challenging conditions effectively.
The Challenges of Inflation
Inflation impacts various asset classes differently, often challenging traditional investment approaches. Historically, periods of rising inflation have been characterized by underperformance in both equities and bonds. U.S. equities, for example, have returned an annualized -7% during significant inflationary periods, with negative real returns in 75% of the cases studied.
Source : The Best Strategies for Inflationary Times - Henry Neville, Teun Draaisma, Ben Funnell, Campbell R. Harvey, and Otto van Hemert
Bonds also suffer as rising yields lead to declining prices, making them less attractive to hold.
Source : The Best Strategies for Inflationary Times - Henry Neville, Teun Draaisma, Ben Funnell, Campbell R. Harvey, and Otto van Hemert