Strategies · Library · Real estate
§16.5Hedges and structures
Inflation hedging with real estate
Real estate returns have tended to follow inflation, with commercial property adjusting faster than some other types. Hold property to protect against rising prices.
Open in the builderAs a long-only proxy; see how ARCANE uses it.
- Asset class
- Real estate
- Held for
- Years
- Data
- ARCANE has the data
- Symphony
- Builds as a long-only proxy
The rule
- Signal
- Inflation rate against property returns
- Entry and exit
- Buy and hold
- Sizing
- Allocation as a share of the portfolio
How it fails
- Hedge works unevenly
- Rate rises hurt REITs
- Sample dependent
Data it needs
- inflation data
- property returns
REIT and inflation-linked bond ETFs are available.
How ARCANE uses it
Alpha could use it when asked how to hold up against inflation. Paper only.
Builds as a long-only proxy. REIT ETF plus TIPS ETF mix approximates a property and inflation tilt.
Source: Kakushadze and Serur (2018), 151 Trading Strategies, §16.5, p. 113 of the SSRN version. Described in our words. Hedges and structures is ARCANE’s filing, not the book’s.