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The October reading of the Consumer Price Index (CPI) showed encouraging signs that inflation may finally be easing, but some market observers believe it's still appropriate for investors to consider asset classes with inflation-fighting reputations.
Real estate equities and the related funds are slumping this year against the backdrop of five interest rate hikes by the Federal Reserve. Those are the breaks for rate-sensitive asset classes.
With bonds letting investors down in a big way this year, income from alternative asset classes like REITs is taking on added importance. One of the primary sources of income in the alts space is real estate.
Rising interest rates are pinching publicly traded real estate investment trusts (REITs) this year, but there's evidence confirming that the real estate sector's overall fundamentals remain stout. That favorable fundamental outlook could open the door to opportunity with assets such as the Virtus Duff & Phelps Global Real Estate Securities (VGISX).
With inflation having been a thorn in the side of investors for more than a year now, it's an appropriate time to evaluate the performances of various asset classes with inflation-fighting reputations. This year, Treasury inflation-protected securities and I bonds are doing their jobs while gold is disappointing in terms of pure performance.
Inflation may be easing. Maybe not. But what's not debatable is that recent readings of the Consumer Price Index (CPI) remain at multi-decade highs and are elevated enough to suggest that material declines could take a while to appear.
As is par for historical precedent, rising interest rates are pinching the real estate sector this year, but it's not all bad news for investors.
Inflation still resides at four-decade highs, but after more than a year of elevated consumer and producer prices, some investors are wondering if it's too late to embrace asset classes known for inflation-fighting traits.