Inflation-Plus Investing: Real Returns for Real Investors

Inflation-plus strategies attempt to deliver positive real returns over reasonable horizons. The “real” in real return strategies is to adjust for inflation. This is different from the “real” in real asset strategies that focus on real assets (loosely, claims to tangible assets). The distinction is important because real assets might not be good additions to real return strategies. This article details how a portfolio view of building a real return strategy can help improve the efficiency of real return strategies compared to simply building the portfolio out of individual assets that may have favorable inflation sensitivities. We take an international perspective to highlight the importance of country-specific inflation and currency risks along with taking a dynamic approach to navigating a changing inflation landscape.