Hello, can someone help me understand the difference between outpacing inflation and hedging against inflation?
CFA text says: “Assets like equities over long periods tend to provide a return that outpaces inflation: the average annual return of the stock market over the past several decades has generally outperformed inflation. Equities perform especially well in real terms when inflation is low. However, equities can be quite volatile in the short term, and their returns may not outpace increasing or persistent inflation.”
If an asset class outpaces inflation, doesn’t that mean that it also hedges against inflation??