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Investors have traditionally relied on three asset classes to protect against the real loss of purchasing power over time: Treasury Inflation Protected bonds, Real Estate (either direct or Real Estate Investment Trusts), and Commodities (both futures on physical assets and the equities of commodities producers). In the chart above, we highlight the changes in forward-looking expected real returns on each. As nominal yields on Treasurys have declined below the break-even expected inflation rate, TIPS now offer a negative real rate. Likewise, as investors have sought yield instruments across the equity spectrum, REIT yields have been pressured to historic lows. By contrast, commodities and stocks of commodities producers have become increasingly attractive. Concerns over global growth (particularly from resource-intensive China) have dampened investors’ outlooks for producers and physical commodities. We never subscribed to the commodities super-cycle. However, we now view commodity-related stocks as attractively valued among global equities. Further, the fundamentals of many commodities—whether marginal costs of production, inventories, or the discounts of forward prices to spot markets—look dramatically improved. We have increased our strategic weights to the commodities complex in client accounts.