How Reits can help your portfolio fight inflation

One of the biggest headaches that investors face in this climate is finding a steady income that has some protection against inflation. This isn’t a new thought: we’ve been wrestling with declining yields on most investments for more than a decade. But for much of that time, the big risk from inflation was what might happen in future rather than the immediate trend.

That risk no longer seems so far away. Prices are rebounding strongly as we emerge from the pandemic.UK consumer price inflation hit 2.5% in June, the highest for three years; in the US the inflation rate is 5.4%, a level it hasn’t reached since 2008. Yet central banks are saying they see this as transitory and so monetary policy is likely to remain loose.

This may yet be true – and it’s certainly hard to see how policymakers could justify tightening policy at this stage anyway, regardless of what they actually believe. But the risk that higher inflation expectations will take hold and bring us into a new era of steadily rising prices is evident in a way that it wasn’t for most of the 2010s. That means we are going to need to worry more urgently than before about which investments are going to respond best to inflation.

This brings