Inflation concerns continue to dominate investor thinking, but a number of managers have cautioned that there is no need to overpay for inflation hedges or prepare portfolios for runaway inflation.

In its 2022 Outlook report, Nuveen Real Estate says that investors should keep an eye on the inflation backdrop and possible central bank reaction, but that pre-emptive action is largely unnecessary for most institutions. “Our bottom-line view about rising rates and high inflation: We think markets have mostly priced in these risks and can handle modest inflation and a couple of Fed rate hikes,” says the report. “Public equity and credit markets can still thrive in environments of low-but-climbing rates and elevated inflation. Real assets and real estate remain important inflation hedges in addition to their fundamental attractiveness.”

The firm does recognise that investors are now operating in a “high-pressure” economic system for the first time in dec