Chart is for illustrative purposes only. Past performance is not necessarily an indication of future results.
Before Covid, consumer inflation averaged about 2%, in line with the Federal Reserve’s target. Today, inflation appears to be operating in a new regime closer to 3%. It remains sticky, and we do not expect a near-term return to prior levels. In our view, the sharp rise in longer-dated global bond yields to multi-year highs suggests markets are also pricing in persistently higher inflation.
Against this backdrop, we believe real assets — particularly commodities, infrastructure and REITs — remain well positioned. Historically, these areas have performed well during periods of elevated inflation. We also see further upside from a durable capital expenditure and manufacturing cycle, supported by aging infrastructure replacement, onshoring across industries, higher defense spending and continued artificial intelligence-related investment. Commodities and infrastructure could be beneficiaries of these trends.
Real estate investment trusts (REITs) add exposure to income-producing real estate, where rents and property values can rise with inflation, potentially complementing the inflation sensitivity of commodities and infrastructure.
Taken together, we believe that real assets like commodities, infrastructure and REITs can help protect against inflation while potentially enhancing returns and improving diversification. As a result, we have increased our exposure to the asset class.
All investments involve risk, including the possible loss of principal. Certain investments have specific or unique risks that should be considered along with the objectives, fees, and expenses before investing.
Asset allocation and diversification cannot ensure a profit or protect against a loss.
MSCI ACWI (All Country World Index): An index that measures the performance of large- and mid-cap stocks across developed and emerging markets worldwide, providing broad exposure to global equity markets. Bloomberg U.S. Aggregate Bond Index: A broad benchmark for the U.S. investment-grade bond market, including government, corporate, mortgage-backed, and asset-backed securities. Bloomberg Commodity Index (BCOM): An index designed to provide diversified exposure to commodity markets through futures contracts across sectors including energy, metals, and agriculture. S&P Global Infrastructure Index: An index that measures the performance of publicly traded companies involved in infrastructure-related businesses, including utilities, transportation, and energy infrastructure. FTSE EPRA/Nareit U.S. Index: An index that tracks the performance of publicly traded U.S. real estate investment trusts (REITs) and real estate companies. It is designed to represent the U.S. listed real estate market. Investors cannot invest directly in any index.
Real estate investment trusts are subject to risk, such as poor performance by the manager, adverse changes to tax laws or failure to qualify for tax-free pass-through of income. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be appropriate for all investors. Stocks that invest predominantly in infrastructure sectors and projects may be subject to a variety of factors that may adversely affect their development, including high amounts of leverage and high interest costs due to capital construction and improvement programs; difficulty in raising adequate capital on reasonable terms in periods of high inflation and unsettled capital markets; and costs associated with changes in environmental and other regulations.
This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances.
Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
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MARK-992340-2026-08-26