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Enhancing portfolio construction via “inflation regimes”

Wesley K. Phoa

Traditional asset allocation methods often struggle to accurately model a portfolio’s resilience to inflation risk. In this paper, Capital Group Solutions portfolio manager Wesley Phoa explores these limitations and describes enhanced techniques. 

KEY TAKEAWAYS

  • Simulation methods for realistically modeling inflation differ significantly from those typically used for asset class returns. 
  • Standard modeling techniques may not fully capture inflationary impacts on asset class correlations.
  • Existing frameworks can be retrofitted to better account for inflation risk across a broad range of asset classes.  

READ THE WHITE PAPER
WKP

Wesley Phoa is a solutions portfolio manager with 32 years of industry experience (as of 12/31/2024). He holds a PhD in pure mathematics from Trinity College at the University of Cambridge and a bachelor’s degree with honors from the Australian National University.

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