IPE RE Awards: Inflation Hedging Not a Main Driver of Property Allocation Decisions

Meagan Nichols, head of the global real assets investment group at Cambridge Associates, said the firm’s approach to inflation hedging consists of using a basket of assets, as opposed to purely real estate at a conference where the firm was presented with the award for Consultancy of the Year.

She said, “I don’t think there is really a perfect hedge, but we have found that putting together a basket of inflation-sensitive securities has more durability…That basket would include things like listed natural resources funds, commodities, potentially gold as well as real estate, infrastructure and credit.”

She added, “Our research has told us that the basket approach is the best approach, but it’s theoretical because we have not had a period of high inflation recently.”

Nichols argued that inflation hedging is only one of the many benefits of building a portfolio of real assets. “It’s also about getting durable income and achieving growth. There are many different reasons to put any real assets into a bucket,… You will get some inflation hedging characteristics but you are also getting all these other attributes.”

More on the award and Cambridge Associates’ real assets investment group can be found in a press release from the firm here: Cambridge Associates Recognized for Excellence and Expertise in Real Assets.

Read the full text IPE RA article here.