Judging by the performance of conventional inflation hedges during the past year, the investing public’s worries over inflation are nearly nonexistent. After all, the Federal Reserve’s unprecedented transparency has already led every market participant to believe they will spring into action if and when inflation begins to rise above the 2% threshold.
However, if history has taught us anything, it’s that the market has a way of deceiving the vast majority of the investing public.
So it’s prudent, then, to establish a watch list and periodically review the best options to hedge inflationary pressures. Even if these hazards lay further out in the future than what the market is currently discounting.
There’s no way to know which individual inflation-linked asset or hedges will perform best when the Consumer Price Index or Producer Price Index begins to rise significantly. That’s why some of the best funds to tackle this situation offer so many different things: Treasury inflation-protected securities (TIPS), precious metals, soft commodities, stocks, and real estate investment trusts (REITs).
So, if you want to develop a game plan, consider some of these best funds to fight inflation and protect your portfolio — and your purchasing power — over the long term.