25 April 2023 Financial Analysts Journal Volume 79, Issue 3

Investing in Deflation, Inflation, and Stagflation Regimes

  1. Guido Baltussen
  2. Laurens Swinkels
  3. Bart van Vliet, CFA
  4. Pim van Vliet
Starting in 1875, this study finds that equity and bond premiums vary across inflationary regimes, turning negative during stagflation. By contrast, factor premiums remain consistently positive across all inflationary regimes.
Read the Complete Article in Financial Analysts Journal Read More CFA Institute Member Content In Practice: Member Companion Feature Read Brief CFA Institute Member Content


We examine asset class and factor premiums across inflationary regimes. As periods of deflation, high inflation, and especially stagflation are relatively uncommon in recent history, we use a deep sample starting in 1875. Moderate inflation scenarios provide the highest returns across asset class and factor premiums. During deflationary periods, nominal returns are low, but real returns are attractive. By contrast, real equity and bond returns are negative during a high inflation regime and especially so during times of stagflation. During these “bad times,” factor premiums are positive, which helps to offset part of the real capital losses.

We’re using cookies, but you can turn them off in Privacy Settings.  Otherwise, you are agreeing to our use of cookies.  Accepting cookies does not mean that we are collecting personal data. Learn more in our Privacy Policy.