Mamdouh Medhat On How to Outpace Inflation
Mamdouh Medhat, Senior Researcher at Dimensional Fund Advisors, discusses how most conventional asset classes have outpaced inflation in a magazine for local authority pension schemes.
Local authorities are often on the front line of public-service provision to some of the country’s most vulnerable people. As such, they have first-hand knowledge of the damage that inflation can inflict on household finances. In addition, inflation brings other longer-term challenges to local authorities, such as its corrosive effect on pension assets.
Sophisticated long-term investors have many, sometimes complex, options to choose from in the battle against inflation, and all deserve some consideration. Nonetheless, our study of inflation and global asset returns highlights that if you are clear about your goals in the fight against inflation, even conventional investment strategies can protect the purchasing power of pension benefits.
Mamdouh suggests that simply staying invested in long-term defensive and growth assets has historically outpaced inflation. Furthermore, if you are particularly sensitive to unexpected inflation, instruments and strategies specifically designed to hedge against inflation make the most sense.
Read the full article from LAPF Investments Magazine here.
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