A study on strategic asset allocation in an inflationary environment

Abstract

This study examines strategic asset allocation for individuals in inflationary environments, utilizing existing literature and published data. It explores the performance of traditional asset classes like equities, bonds, and real estate, alongside alternatives such as commodities and inflation-protected securities. By analyzing historical inflationary periods, the study identifies optimal diversification strategies to preserve purchasing power. The research highlights the role of equities and real assets as inflation hedges and the limitations of fixed-income investments. Findings suggest that diversified portfolios with inflation-resistant assets perform better than those reliant on fixed-income securities. This paper offers evidence-based recommendations for adjusting asset allocation to mitigate inflation risks and enhance investment resilience.