When the US Dollar has rallied in the past, real assets, especially gold and commodities have performed poorly, as the following table shows. Although real assets can provide a hedge against a weak dollar, they also can underperform when the dollar strengthens. Similarly, although real assets can provide some protection against inflation, they can also perform poorly when inflation is low. And in the current low-growth environment, inflation has been declining, according to data from the Bureau of Economic Analysis, and some observers believe it could remain low for a while despite the Fed’s easy money policy.
Source: Morningstar. Data as of November 2013.
1 U.S. Dollar Index (DXY).
2 S&P GSCI Gold Total Return Index.
3 S&P GSCI Total Return Index.
4 Barclays U.S. Corporate Baa Bond Total Return Index.
5 S&P 500 Total Return Index.
Past performance is no guarantee of future results.
The historical data are for illustrative purposes only, do not represent the performance of any particular investment, and are not intended to predict or depict future results. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment. Performance during other time periods may be different or negative. Investors may experience different results. Due to market volatility, the market may not perform in a similar manner in the future.
