Trading During Inflationary Times
- By Sam van de Schootbrugge
- 6 min read
Summary
• A Man Group paper examines the real return performances of various assets and trading strategies during high-inflation periods.
• It finds commodities and collectables offer positive real returns, while bonds, equities and residential real estate tend to perform poorly.
• To capture positive real returns, consider using cross-sectional and time-series momentum strategies – they generally yield higher returns during inflationary periods than non-inflationary ones.
Introduction
In a recent Deep Dive, we reviewed the performance of equities during periods of high inflation. It showed they have been a poor hedge historically. But, more recently, there are signs real stock returns have become much less sensitive to inflation as the policy rate has tended to zero. With inflation expected to remain high in 2022, what are the best trading strategies in this environment?
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