When Inflation Hedges Become Inflated

Timing is everything. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=37635&elqTrackId=610a4cc92a3f4ffcad97e69b992b9544&elq=6523ff3cef744fd88cdee3eeaed77753&elqaid=37635&elqat=1&elqCampaignId=17661) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] What happens when the inflation hedges become, well, inflated? That topic has been on my mind this year, as investments assumed to confer inflation protection have garnered investor interest amid the highest inflation rate recorded in 40 years. Commodities-futures-tracking funds, for example, have pulled in nearly $4 billion in new assets, thanks in no small part to their strong performance during the recent inflationary shock. Concerns about recession have recently come to the fore, taking investments assumed to offer inflation protection down with them. But that doesn’t eliminate the risk that investors adding inflation protection now could be late to the party. During one of the last big inflation scares—in the mid-2000s—[investors flocked to commodities-tracking funds]( only to see them take a nosedive during the Great Financial Crisis. I recently took stock of a range of [inflation-protective investments]( with an eye toward whether they’re cheap or dear. In the case of inflation-protected bonds, my bias is to not overthink the timing decision, but investors have good reason to be more circumspect with new positions in commodities, energy stocks, and REITs. While we’re on the topic of investor timing, I also appreciated [John Rekenthaler’s recent takedown]( discussion--of so-called tactical asset allocation funds. These funds, which jump among asset classes in an effort to capture returns and limit the downside, have finally had an opportunity to shine in 2022’s tricky market. But they haven’t necessarily risen to the challenge and their long-term results are underwhelming. These funds don’t hold much in assets, but the broader lesson is that even professional investors aren’t all that great at market-timing, so advisors and individual investors aren’t likely to be, either. Finally, time—not timing—was the focus of a recent discussion that Jeff Ptak and I had with [Jordan Grumet](. Jordan is a hospice doctor, a blogger, and hosts his own podcast called “Earn & Invest.” In his latest book, Taking Stock, and in his conversation with me and Jeff, Jordan shared lessons that he has learned from terminally ill patients in their last months and days. Most of those lessons relate to an asset more precious and finite than money—our time on Earth. I was inspired by the conversation and hope that you will be, too. With warm regards, Christine [Is It Too Late to Add Inflation Protection to Your Portfolio?]( A closer look at some asset types that can help against inflation. [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [A Hospice Doctor Shares Lessons About Work, Money, and Life]( Jordan Grumet on his path to financial independence and mastering 'the art of subtraction.' [Listen Now]( [The Best Places to Park Your Short-Term Investments]( Yields are important, but so are liquidity considerations and guarantees. [Read More]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2022 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602