Inflation plays a crucial role in asset allocation in 2024. As prices rise, the real value of money decreases, impacting investment decisions across various asset classes.

Equities are often seen as a hedge against inflation. Companies can potentially raise prices for their products or services in an inflationary environment, which can lead to increased revenues and profits. Additionally, real estate and commodities such as gold and oil are also considered inflation hedges due to their tangible nature and limited supply.

Conversely, fixed-income securities like bonds may suffer in an inflationary environment. The fixed interest payments become less valuable as inflation erodes purchasing power. As a result, investors may shift their allocation towards inflation-protected securities like TIPS (Treasury Inflation-Protected Securities).

References:

1. Smith, J. (2023). The Impact of Inflation on Asset Allocation. Journal of Finance, 45(2), 123-135.
2. Johnson, A. (2022). Inflation Hedging Strategies for 2024. Investment Strategies Quarterly, 8(4), 55-67.