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Over the past three years, there has been continuous discussion of asset allocation that would help protect against inflation - if and when it arrives. Multiple public pension funds, as well as foundations and endowments, have implemented various strategies designed to diversify the portfolio, including real assets, Treasury inflation protected securities and other hedges. Most commonly, plans use Treasury inflation protected securities, according to a recent Mercer study.

Yet some managers see any one of the asset classes as limited - for instance, the Town of Greenwich in November dumped its TIPS allocation because inflation hasn't materialized. More different types of classes should enter the fray as inflation hedging increases. AllianceBernstein has conducted a unique study into what it takes to truly achieve inflation protection, and its findings suggest that a combination of several classes might make most sense. Watch Jon Ruff, portfolio manager and Director of Research at AllianceBernstien, discuss the factors impacting inflation hedging and how to achieve it most efficiently in this video from our sister Journal of Portfolio Management and then check out the this one-of-a-kind study at the link below.

View Abstract: http://www.iijournals.com/doi/abs/10.3905/jpm.2011.37.3.085