How nine asset classes fare against inflation
The Federal Reserve’s latest round of quantitative easing is scheduled to last forever, or until unemployment improves, whichever comes first. This third round of QE has reignited fears that all the money being pushed into the system will eventually trigger inflation. The most popular form of protection against inflation is Treasury Inflation Protected Securities, or TIPS.
However, TIPS have never actually been tested in the kind of hyperinflationary environment that is the worst of people’s fears. The first TIPS was actually sold in 1997. “They’re a little bit of a mystery,” said Joanna Bewick, lead portfolio manager of the Fidelity Strategic Funds. .
Fidelity Investments back-tested the performance of TIPS, as well as eight other assets, against the CPI on a year-to-year basis to see which provided the best protection against inflation. The results? No asset class beats inflation 100% of the time. Here's how the fared.
(Story: Jason Kephart)