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CONTRIBUTORS

Onay Payne

Portfolio Manager
United States

Richard Schaupp

Portfolio Manager

Preview

After lying dormant for nearly a decade, inflation resurfaced with a vengeance in 2021, fueled by pandemic-induced shortages in goods and labor. CPI inflation rose 5.4% year over year in June, the highest level since 1991.

Concerns exist about whether the recent surge may persist, but it has already refocused attention among investors on how well their portfolios may be positioned for a rising-price environment. For investors focused on income, the key question is how well yields and distributions will hold up as economic recovery continues to evolve.

As a tangible asset that generates ongoing cash flow, with a history of rents keeping up with inflation over time and contractual provisions that allow landlords to partially compensate for rising prices, commercial real estate can provide a useful complement to equities and bonds in a diversified portfolio.

WHAT ARE THE RISKS?

The Consumer Price Index (CPI) measures the average change in U.S. consumer prices over time in a fixed market basket of goods and services determined by the U.S. Bureau of Labor Statistics. The National Council of Real Estate Investment Fiduciaries Property Index (NPI) is an institutional commercial real estate benchmark. CBRE is a consultancy providing information and intelligence on the commercial real estate market. All investments involve risks, including possible loss of principal.

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton. The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance.

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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

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