“In 2021, the S&P 500® Index recorded one of its highest risk-adjusted returns in several decades. While risk is always present in the capital markets, in 2022 it may reshape itself in defense of elevated volatility, monetary tightening, and inflationary pressures that challenge the resiliency of consumer spending and corporate profit margins.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners

Inflation has become a greater threat to portfolios than it was in the previous decade. Here’s a look at potential ways investors can hedge against such risk.

“Exposure to the strong consumer and the strong corporate climate are critically important opportunities for today’s investors.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners

Both asset classes offer the potential for enhanced diversification, relatively attractive yields, lower volatility than equities, and attractive risk-adjusted returns. 

“While the market may correct at some point, current conditions don't support the expectation of a full-fledged bear market.”

–Joe Terranova, Chief Market Strategist, Virtus Investment Partners

Puzzled about the direction of inflation? Here are some key facts, figures, and definitions, along with three factors that are pushing inflation up over the short term and over the long term.

There are ways for active managers to generate positive returns from rising – and falling – inflation. The key is to understand the different risk premia that combine to make up government bond yields and how to use the relevant tools to take advantage of them.

Whether inflation becomes “sticky” or transitory, listed real estate has the potential to hedge investors’ portfolios.

Portfolio Managers from select Virtus affiliates and subadvisers share their latest thoughts on the prospects for inflation and how certain asset classes may help protect portfolios in an inflationary environment.