Inflation Resilient Bond Strategy | News & Insights | Validus Risk Management
  • White Papers

Inflation Resilient Bond Strategy

13 May 2024

Canadian investors are looking for effective alternatives to manage inflation risk. 

This white paper examines how infrastructure, real estate and commodities are considered as potential inflation hedges since the Canadian Government stopped issuing of Real Return Bonds (RRBs), and explores a more liquid, scalable and targeted approach to building inflation resilience through the Validus Inflation Resilient Bond Strategy. 

Key Takeaways

  • Commodities show the strongest inflation-hedging characteristics among the alternative assets examined 
  • Real estate offers some inflation protection, while infrastructure’s hedging benefits are less convincing 
  • Alternative assets can introduce basis risk, making inflation protection less precise 
  • The Validus Inflation Resilient Bond Strategy (IRBS) combines nominal bond exposure with a custom Canadian CPI hedge to provide a more effective approach to managing inflation risk
Download the White Paper

What’s inside the white paper

  • Inflation protection assets: efficacy and performance  
  • Where to source inflation protection
  • The effectiveness of index-linked bond substitutes  
  • Inflation hedging and excess returns  
  • Performance characteristics  
  • Key takeaways and synthesis 

Author

Kambiz Kazemi, Chief Investment Officer

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