 | Deflating Inflation Blackbook
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Summary
Most investment portfolios are not designed with inflation risk explicitly in mind. As a result, many investors are often dangerously susceptible to an unexpected rise in inflation, which can present one of the most pernicious environments for traditional portfolios. What’s worse, at the same time that many investors’ assets are hit by an inflationary spike, their liabilities or living costs tend to rise. Such a double whammy can leave investors in a deep hole.
There’s a good deal of confusion and disagreement about how best to protect against inflation, both in terms of what assets hedge inflation most effectively and how to incorporate them in a portfolio. This paper provides a framework for analyzing the inflation-hedging decision.
For a full discussion of this topic, please download the PDF at the top of the page.
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