The Best Strategies for Inflationary Times

32 Pages Posted: 29 Mar 2021 Last revised: 25 May 2021

See all articles by Henry Neville

Henry Neville

Man Group

Teun Draaisma

Ruffer LLP

Ben Funnell

CCLA Investment Management

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Otto Van Hemert


Date Written: May 25, 2021


Over the past three decades, a sustained surge in inflation has been absent in developed markets. As a result, investors face the challenge of having limited experience and no recent data to guide the repositioning of their portfolios in the face of heighted inflation risk. We provide some insight by analyzing both passive and active strategies across a variety of asset classes for the U.S., U.K., and Japan over the past 95 years. Unexpected inflation is bad news for traditional assets, such as bonds and equities, with local inflation having the greatest effect. Commodities have positive returns during inflation surges but there is considerable variation within the commodity complex. Among the dynamic strategies, we find that trend-following provides the most reliable protection during important inflation shocks. Active equity factor strategies also provide some degree of hedging ability. We also provide analysis of alternative asset classes such as fine art and discuss the economic rationale for including cryptocurrencies as part of a strategy to protect against inflation.

Keywords: Inflation hedge, inflation surprises, inflation shocks, temporary inflation, permanent inflation, inflation betas, portfolio management, asset allocation, risk management, commodities, gold, factor investing, bitcoin, cryptocurrency

JEL Classification: G11, G13, G15, G01, E31, E44

Suggested Citation

Neville, Henry and Draaisma, Teun and Funnell, Ben and Harvey, Campbell R. and van Hemert, Otto, The Best Strategies for Inflationary Times (May 25, 2021). Available at SSRN: or

Henry Neville

Man Group ( email )

Sugar Quay
Lower Thames Street
London, EC3R 6DU
United Kingdom

Teun Draaisma

Ruffer LLP ( email )

United Kingdom

Ben Funnell

CCLA Investment Management ( email )

United Kingdom

Campbell R. Harvey (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Otto Van Hemert

Man AHL ( email )

Riverbank House
2 Swan Lane
London, EC4R 3AD
United Kingdom

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