For more than a decade, inflation has been tame. Investors could afford to focus their attention elsewhere. But the global pandemic and its effects have changed that. We think this inflationary awakening calls for a close look at the quintessential inflation hedge: real assets.
Is Transitory Stagflation a Thing?
Stagflation has joined transitory as a popular term to describe current macro developments around global inflation and growth. Germany and the US offer test cases to investigate the potential for a stagflation scenario on the horizon. As such, while stagflation may make an appearance, it should be brief and we expect growth to reaccelerate, putting stagflation concerns to rest by early 2022.
The Ongoing Case for REITs in the Economic Recovery
One of the hardest-hit asset classes in the first quarter of 2020 was publicly listed US Real Estate Investment Trusts (REITs). However, the vaccine-driven global economic recovery has lifted the group off its pandemic low to a nearly 90% cumulative return over the past 18 months. REITs have enjoyed strong returns that rival those of US equities thus far during the reopening economy. The question, then, is whether this strong rally has legs.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
Responsible-Factor (R Factor) scoring is designed by State Street to reflect certain ESG characteristics and does not represent investment performance. Results generated out of the scoring model is based on sustainability and corporate governance dimensions of a scored entity.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. Past performance is not a reliable indicator of future performance.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
AdTrax code 3928021.1.1.AM.RTL
Expiry date 11/30/2022