Uday's avatar
$95.2m follower assets
Inflation beta
Commodities are the go to asset class for inflation hedging and positive relative returns during periods of high inflation.

But it is not the only one that can help you do that.

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Source: Vanguard 2023 Market Outlook

Short-term TIPS has an inflation beta closer to one, providing considerable inflation protection. International equities provide a better inflation hedge due to higher proportion of industrials and materials stocks in the main indices.

Amongst equities, sectors and stocks with cash flow stability, and a growing stream of dividends have outperformed lately. Since a lot of them are components in the value indices, value has outperformed growth in 2022, and is expected to maintain its lead in the near-term.
Rihard Jarc's avatar
would be interesting to see the returns based on the legs of the inflation cycle. What worked best when inflation was easing (still high) etc.
Conor Mac's avatar
I am 95% equity, 5% REIT. RIP
Uday's avatar
@investmenttalk I did have some exposure to commodities via $PDBC but it has round-tripped back to levels from early 2021.
Nathan Worden's avatar
@uplusk What do you feel more comfortable holding now, TIPS or commodities?
Uday's avatar
@nathanworden I had a bit of both and it was the first inflationary cycle I experienced this time around. Commodities are quite volatile and riskier, and you need a bit of timing for entry and exit. For a low risk and more hands-off approach TIPS might be a better option.

I think im fine with both .Commodities might be a decent hedge for your riskier part of your portfolio whereas TIPS could be a your hedge for fixed income.



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