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Pimco and JP Morgan see inflation linked bonds and gold as diversifiers:
Interesting video interview quote (in link below): "US Corporations last year borrow well over a trillion dollars that was spent primarily on financial engineering (buying back stock, raising dividends, M&A activity)"
Pick any fund that you think will massively under perform...and you'll get the same result as most funds and strategies that purport to hedge inflation. IMO inflation linked bonds and funds are also dogs to be avoided at all costs. Like every dog, it will have it's day but not worth a dedicated long-term allocation, and timing these things is a guess at best.
The fund that makes the most money going forward would be your best inflation hedge - be it in technology, utilities or watermelons.
There are many funds whose promotional literature and/or prospectuses claim to be good inflation hedges. There's a dilemma here in that the U.S. hasn't really experienced serious inflation for over a decade. That means that the 10-year performance records on these funds don't tell us much. In fact, the best of them probably lagged the broader markets over that period.
Hell, my guess is as good as yours. I'd guess a fund like PRNEX might work in a period of serious inflation (despite the fact that its manager doesn't think you should currently own it). Commodities funds and gold funds might do well during such a period, Funds investing in foreign currencies should do better than those holding U.S. denominated bonds. One thing you would not want to own during a period of heavy inflation (10%+ per year) would be a long-term bond fund loaded with bonds yielding 2 and 3%. Umm ... Don't overlook cash. Many money market funds yielded 15-20% during the heady inflation days of the 80s.
I have no favorite (but dabble in several) and, as I said, choosing one is tough if you're looking at 10-year returns. Won't tell you a damned thing.
In the same realm consider HAP (Commodity producers) and JRO (bank loan). I would not consider either as a dedicated inflation hedge, but should do well in that environment.
Comments
There are many funds whose promotional literature and/or prospectuses claim to be good inflation hedges. There's a dilemma here in that the U.S. hasn't really experienced serious inflation for over a decade. That means that the 10-year performance records on these funds don't tell us much. In fact, the best of them probably lagged the broader markets over that period.
Hell, my guess is as good as yours. I'd guess a fund like PRNEX might work in a period of serious inflation (despite the fact that its manager doesn't think you should currently own it). Commodities funds and gold funds might do well during such a period, Funds investing in foreign currencies should do better than those holding U.S. denominated bonds. One thing you would not want to own during a period of heavy inflation (10%+ per year) would be a long-term bond fund loaded with bonds yielding 2 and 3%. Umm ... Don't overlook cash. Many money market funds yielded 15-20% during the heady inflation days of the 80s.
I have no favorite (but dabble in several) and, as I said, choosing one is tough if you're looking at 10-year returns. Won't tell you a damned thing.