Endowments and Foundations
VIDEO: Wellington Management Endowments and Foundations Endowment Model
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Inflation Hedging
After more than 25 years of disinflation and conventional wisdom that asserts the effectiveness of equities as an inflation hedge, it is time to review and refresh inflation-hedging asset allocation decisions. From a policy perspective, one solution to consider is a mix of inflation-hedging assets.
TIPS, the most direct hedge, only protect the assets that are invested in them. While equities have good long-term hedging capabilities, the relationship breaks down over shorter periods. Given these limitations, the tool kit for shorter-term hedges may include commodities and natural resource equities, which are levered to growth-oriented inflation.