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Got you.
I tend to look at things from like this at a non-portfolio level, and seldom cross-asset (probably as most of my experience has been within specific asset classes.
I also like the that with an inflation-linked hedge, you reduce the number of unknowns (no doubt paying through the nose for it though), much in the same way that you might choose a fixed rate mortgage over a floating rate.
NotThamesWater-
I tend to look at things from like this at a non-portfolio level, and seldom cross-asset (probably as most of my experience has been within specific asset classes.
I know the feeling- the "personal finance" investment decision is very different to doing this institutionally with other people's money.
I tend to think that retail investors (myself included) need a really good reason to do anything more than pay off expensive debt, buy equity tracker funds and try not to check their portfolio balance too often. That reason is usually tax.
NickCJ
Yeah, bond duration. Most of the UK inflation linkers are very long-duration instruments. They have all performed poorly in the last 3-6 months despite rising inflation because the impact of the long end of the forward curve rising has outweighed the near-term benefit from higher inflation.
It's an opportunity cost point. You could buy equities instead of these instruments and capture the equity risk premium. You are sacrificing that risk premium to get a pretty ineffective hedge.