Of all the variables the new administration brings for investors, one of the trickiest to plan for is inflation. Inflationary pressures were already building before the election ushered in the prospect of a sweeping agenda of pro-growth fiscal and de-regulatory policies. One common way to hedge against inflation is to diversify portfolios with exposure to real assets–including real estate, commodities, infrastructure and TIPS–that tend to perform better during inflationary periods. However, each of these categories reacts very differently depending on what form inflation takes. QMA analyzes historic returns during normal and above-average periods of inflation and makes the case for an allocation to real assets.