Returns on assets generally linked to inflation accrue to equity holders, which is why we often root for rising prices, explains Wellington Management Portfolio Manager and Global Industry Analyst G. Thomas Levering. Tom manages John Hancock Enduring Assets Fund, which targets stocks of companies with long-lived physical assets and revenue streams that may benefit from contractual inflation adjustments.

Learn more about the case for investing in global utilities, listed infrastructure, and other enduring assets: …(read more)

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Inflation is a persistent increase in the general price level of goods and services in an economy. This rise in prices leads to a decrease in the purchasing power of money. For investors, this can be a concern as inflation erodes the real value of their investments. To protect their portfolios from the impact of inflation, investors often turn to assets that have historically been effective inflation hedges.

Listed infrastructure assets are one such option for investors looking to hedge against inflation. Infrastructure assets, such as toll roads, airports, and utilities, typically have pricing power that allows them to pass on increased operating costs to consumers. This ability to raise prices in response to inflation can help these assets maintain their value over time.

Listed infrastructure investments also offer other benefits beyond inflation protection. These assets often provide steady cash flows and have low correlations with other asset classes, making them a valuable addition to a diversified portfolio. Additionally, infrastructure assets tend to be long-lived and have physical properties that can provide a degree of protection in times of economic uncertainty.

In addition to listed infrastructure assets, investors may also consider other enduring assets as an inflation hedge. These assets, such as real estate, commodities, and precious metals, have intrinsic value that can help shield them from the impact of inflation. Real estate, for example, tends to appreciate in value over time, making it a popular choice for investors looking to protect their wealth from the effects of inflation.

Commodities, such as gold and oil, are also commonly used as inflation hedges due to their ability to maintain their value in times of economic instability. These assets tend to perform well during periods of high inflation, making them a valuable addition to a well-diversified portfolio.

While inflation hedging with listed infrastructure and other enduring assets can be effective, it is important for investors to carefully consider their investment objectives and risk tolerance before making any decisions. It is also advisable to consult with a financial advisor to determine the most appropriate strategy for their individual circumstances.

Overall, listed infrastructure assets and other enduring assets can be valuable tools for investors looking to protect their portfolios from the impact of inflation. By incorporating these assets into a diversified investment strategy, investors can help safeguard their wealth and achieve long-term financial stability.