This includes a balanced mix of all types of commodities. Generally a great hedge against rising inflation and performs well during periods of high and steady growth.

Inflation-linked Bonds are the key asset class in this category. Their success is inversely related to Real Rates, interest rates received from an investment after removing credit and inflation risk. Real rates generally represent the “pure” cost of money, and can therefore be considered a measurement of a company’s ease in taking on debt. Real Rates tend to rise in the setting of high growth and demand for credit/cash. The inverse relationship between Inflation-linked Bonds and Real Rates means that this category performs best under falling growth.

This rate compensates investors for the expected inflation risk of bonds. This factor inevitably will perform better when inflation comes in below expectation.

This is the spread (interest rate) earned by investors for taking on credit risk on an Emerging Market Bond. Under rising growth and/or inflation, demand for exports will usually increase, providing more cash inflows for emerging market governments and reducing the expected probability of default. The resulting rally in emerging market bond prices ultimately improves Emerging Market Credit spreads and associated returns.

This factor isolates credit spreads for lower-rated companies. This return stream outperforms when the growth of these companies exceeds expectations, improving their ability to repay their debt, resulting in a lower probability of default and a higher return on your investment.

Developed World Equities will generally will perform well in high growth periods driven by the equities and falling inflation. When inflation falls, there is a lower cost to borrowing and higher present value of expected future dividends.

Emerging markets are strongly linked to the global economy. Thus, similarly to Developed World Equities, they outperform in a strong growth environment.

Natural resources are highly correlated to inflation expectations, given the fact that their main output products are commodities. Logically, they therefore tend to outperform in environments of rising inflation

Companies in frontier markets are the main producers of commodities and tend to outperform in environments of long-term rising inflation. Why? These companies tend to hedge out their natural resources liabilities such that short-term spikes and dips in commodity prices do not strongly affect their profits.