No Inflation? Somebody Forgot to Tell These Guys

Economists, strategists and Helicopter Ben Bernanke may not think much of inflation these days, but investors—well, that’s another story.


A look at equity fund movements is showing a clear preference for stuff you can hold in your hands or run your fingers through or just feel beneath your feet — in other words, classic inflation plays.

Indeed, precious metals and real estate are all the rage.

Real estate funds are tops in terms of asset preference this year in the specialty equity fund category, according to the latest weekly data from TrimTabs. They are followed closely by precious metals funds.

Real estate funds, which are comprised mostly of commercial REITs, comprised 1.2 percent of asset inflows last week, 4.3 percent of assets in the past three months and 9.1 percent year-to-date, beating precious medals for popularity though not quite for return.

Still, the real estate funds have brought a healthy17.8 percent return this year – nice for an industry that is supposed to be dying. (Not to blow my own horn, but I wrote that “Commercial Real Estate’s Death Knell May Have Been Premature” back on July 21.)

The FOMC made much following its meeting Tuesday of declaring war on deflation.

But the markets may well fear that once Dr. Ben gets the inflation monster off the lab table, he may not be able to stop him.

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