Investors favour real assets as a hedge against rising inflation rates. Whereas, in an environment of higher inflation, financial assets such as bonds lose value in real terms, the real prices of real assets remain stable or increase. During the last 15 years, inflation rates in the industrialised countries have fluctuated at moderate levels of up to 3% . (see Fig. 11), although in some countries they have been considerably less. In such an environment, investment in real assets with a view to inflation protection typically offers hardly any advantages. For the next two years, in our basic scenario we.
