Do tangible assets protect against inflation in the short term?
Among economists, it is already a foregone conclusion that consumer prices will continue to rise and will be above 4 percent by the end of 2021. From a historical point of view, would this be a good environment for the most important asset classes?
The fund manager of the HQT Global Quality Dividend selected four asset classes for his new analysis: equities (MSCI USA), bonds (BLB Barclays Global Aggregate), commodities (S&P GSCI) and real estate (Case-Shiller Home Price Index). For the evaluation, Sven Lehmann divided the annual change in core inflation into four segments. The study covers the years since 1976.
- “Looking at the real return over the next 12 months, 3 of the 4 asset classes performed best on average in the past with an inflation rate of 3 to 5 percent: equities, bonds and commodities.”
- “On average, equities rose by 14.1 percent in real terms, bonds by 8.6 percent and commodities by 5.9 percent. However, all results have very high fluctuations.”
- “In the case of bonds, the good performance is surprising at first glance. However, the data at the end of the 1970s were also included here, when inflation in the corridor of 3 to 5 percent was already on its way down again.”
- “If inflation rose above the 5 percent mark, it has been difficult for all asset classes in the past to achieve positive returns over the next 12 months.”
- “The only exception is the raw materials, which was mainly due to the energy raw materials.”
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Investing on the capital markets involves risks and can, in extreme cases, lead to the loss of all capital invested. Past performance is not an indicator of future performance. Even forecasts have no reliable significance for future performance. The presentation is not investment, legal and/or tax advice. All contents on our website are for information purposes only.
Executive Partner | Fund Manager HQ Trust
Sven Lehmann has been working in portfolio management at HQ Trust since 2011, where he is responsible, among other things, for the creation, maintenance and analysis of models for the national economy and capital markets. He has managed the HQT Global Quality Dividend fund since 2012. The graduate business mathematician has more than 15 years of experience in finance and insurance.