Navigating Higher Inflation: Multi-Asset Approach

This document is a technical report that discusses the implications of rising inflation on financial markets and investment strategies. It outlines the behavior of various financial assets during periods of higher inflation and presents a preferred approach for constructing a multi-asset inflation protection portfolio. The report indicates that traditional assets, such as U.S. government bonds and equities, have historically struggled to provide attractive returns in inflationary environments. It emphasizes the performance of alternative assets, including real estate investment trusts (REITs), infrastructure equities, gold, and treasury inflation-protected securities (TIPS), which have shown better risk/reward characteristics during inflationary periods. The analysis includes empirical data on asset performance and correlation to inflation, suggesting that a discriminating approach to selecting inflation protection assets is essential. The report concludes by recommending a focus on assets that are most sensitive to inflation and appropriate for the prevailing economic conditions.