Open AccessInflation Hedging Through International Equity Investment
Author(s) -
Michael T. Bond,
Jack H. Rubens
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v8i2.6172
Subject(s) - equity (law) , economics , financial economics , monetary economics , portfolio , stock (firearms) , inflation (cosmology) , hedge , foreign portfolio investment , macroeconomics , return on investment , physics , mechanical engineering , ecology , biology , theoretical physics , political science , law , engineering , open ended investment company , production (economics)
For years common stock were thought to be an effective inflation hedge. The dismal performance of domestic equities in the 1970s was, thus, completely unanticipated. A possible method for improving stock portfolio performance on a period-by-period basis vs. inflation would be the inclusion of foreign equities. Regression analysis of various foreign equity markets and internationally efficient portfolios vs. measures of actual, expected and unexpected inflation indicated that including non-US equities in portfolios did not protect investors from inflation on a period-by-period basis in the 1970-88 time period.