High inflation can erode the value of liquid, fixed-income investments. However, certain AIF asset classes act as a natural hedge against inflation.
- Real Estate: Property values and rental income tend to rise with inflation.
- Infrastructure: Many contracts (e.g., toll roads, power purchase agreements) are explicitly indexed to inflation.
- Private Equity: Fund managers can pass on cost increases to customers through pricing power, protecting profit margins.
A well-allocated AIF portfolio can protect and grow wealth during inflationary periods.
