'Real' Assets

Andrew Ang

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

September 29, 2012

Columbia Business School Research Paper No. 12-60

Traditionally, “real” assets such as inflation-indexed bonds, commodities and real estate were thought to have correlate well with inflation and thus provide protection against rising price levels. But many of these assets turn out not to be that “real.” While a single real bond provides a constant real return by definition, real bonds as an asset class has a correlation with inflation close to zero. Among commodities, only energy has been a decent inflation hedge. Gold, surprisingly, has been a poor inflation hedge. Real estate has some, but certainly far from complete, inflation-hedging ability. Cash (T-bills), in contrast, is one of the best inflation hedges.

Number of Pages in PDF File: 64

Keywords: Inflation, Commodities, Gold, Real estate, TIPS, real bonds, inflation risk premium, inflation hedge, precious metals, backwardation, normalization, REIT

JEL Classification: E31, E32, E43, G11, G12

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Date posted: October 13, 2012  

Suggested Citation

Ang, Andrew, 'Real' Assets (September 29, 2012). Columbia Business School Research Paper No. 12-60. Available at SSRN: http://ssrn.com/abstract=2161124 or http://dx.doi.org/10.2139/ssrn.2161124

Contact Information

Andrew Ang (Contact Author)
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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