CLS’s Macro Inflation Strategy offers exposure to assets that have traditionally provided protection against rising inflation rates, as well as the flexibility to own stocks and bonds when deflation is more likely. This strategy seeks to dynamically manage inflation risk and improve the portfolio’s ability to tolerate inflation without requiring a permanent allocation to commodities and inflation-linked bonds, such as TIPS, when market conditions are unattractive for those asset classes.
The portfolio allocates assets across four asset classes, the allocations to which change depending on current inflation and inflation expectations:
- Treasury Inflation Protected Securities (TIPS)
- U.S. Treasury Bills
- Traditional Assets (Stocks and Bonds)
Discover Why Inflation Can Be a Concern
Increasing inflation can be very damaging to traditional stock and bond investment portfolios because it decreases purchasing power, which could result in investors having to liquidate assets to continue funding their financial obligations. High inflation is particularly concerning for investors who draw income from their investments, specifically retirees who may no longer be accumulating much wealth or receiving regular paychecks.