Investors worried about inflation should consider tilting their portfolios toward areas of the market that tend to do well when prices pick up, according to Gargi Pal Chaudhuri, head of iShares investment strategy, Americas at BlackRock.
“So looking at commodity producers, looking at financials — more recently, looking at infrastructure — that has been an area of the market that’s garnered a lot of interest,” Chaudhuri said at CNBC’s Your Money event on Wednesday. (View the entire session.)
When it comes to fixed income, Chaudhuri said Treasury inflation-protected securities, or TIPS, have done especially well of late, “up over 5% this year.”
“And we think that will continue to do well over nominal bonds,” she said.
Chaudhuri also said real estate was another good investment in an inflationary environment.
Yet it’s just important for investors to pay attention to their own financial situation as to the larger economy’s, said certified financial planner Marguerita M. Cheng, CEO and co-founder of Blue Ocean Global Wealth and a member of CNBC’s Advisor Council.
“Their goals, their time horizon, their risk tolerance — that’s their strategic allocation,” Cheng said. “Then there are times where you can be a little bit tactical.”
Cheng tries to make sure that clients nearing or in retirement have the right amount of liquid assets available to them without too much of their money out of the market, which could protect them from equity risk but make them vulnerable to inflation.
Increasingly, another allocation question on the table is how much people should split their money between traditional assets, such as stocks, and digital ones like cryptocurrencies and NFTs, or nonfungible tokens.
“Alternatives can represent anywhere between 5% to 15%,” Cheng said.