Analysis: How Inflation Affects a Portfolio

As economists debate forecasts for interest rate increases how likely? how big? how soon? advisors looking at portfolio strategy face a more straightforward question: How have various asset classes performed during years with varying levels of inflation?

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Comments (1)
We have been proponents of using a multi-faceted diversification balancing between stocks vs bonds, international vs US, large vs small, value vs growth, including real estate and emerging markets to reflect the clients' risk tolerance and time horizons. We experience the full market returns, both good and bad, while rebalance as needed to hold the portfolio model to the client specifications. Overall, this has been most rewarding and easiest to defend to the client. It is always challenging to advise a client where to invest given the expected inflation movements between asset classes, so we prefer to keep them invested in funds that allow easy rebalancing to capture the incremental gains between the different asset classes as they arise.
Posted by Bobby G | Tuesday, April 29 2014 at 11:42AM ET
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