Inflation Monitor

Download the full PDF version.

Fourth Quarter 2015

Our Global Macro Strategy Team's Inflation View

Summary of Our Inflation Views

  • Continued Contained Inflation in Near Term: U.S. inflation, as measured by the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE), remains muted. We expect it to remain largely contained (1.5% to 3.0%) during the next 12 months.
  • Goods Inflation—Weak Global Economy Keeping Prices Low: The global economy is mostly struggling. Europe has required monetary stimulus to fight deflation, Japan is slowly easing out of recession, and Russia, China, and Brazil are slowing.
  • Currency Inflation—Strong Dollar Keeping U.S. Inflation Low: Divergent paths in economic growth and monetary policies between the U.S. and other economies have supported U.S. yields, making the dollar attractive and raising its relative value. This reduces the cost of dollar-priced imports, including key commodities such as oil.
  • Services Inflation—U.S. Wage and Shelter Costs Are Rising: Wage and salary pressures are in the pipeline as employment improves. Also, rents and home prices are increasing.
  • Longer-Term Monetary and Fiscal Policy Inflation Risks: Higher inflation (over 3.0%) could occur longer-term, driven by the unprecedented monetary and fiscal stimulus used since 2008 and stronger economic growth. Most monetary policies in the developed world are aggressively stimulative. Bank reserves, which could be unleashed at some point, are very high.
  • Valuations on Inflation-Linked Investments Look Relatively Attractive: We believe strongly that some level of inflation protection be incorporated in investor portfolios.

Designing Better Outcomes: Inflation Solutions

American Century Investments offers a broad suite of inflation solutions designed to help preserve purchasing power. Our diverse set of six strategies can help offset various sources of inflation and can be easily integrated into existing investment portfolios.

Key Objectives

Fund Provides Inflation Hedging Through: Provides Inflation Hedging, Plus: Inflation Hedge for:
Short Duration Inflation Protection Bond Fund Short-duration bonds, primarily inflation-indexed

Low Interest Rate Risk
Short-duration portfolio

Fixed Income
Inflation-Adjusted Bond Fund Investment-grade, inflation-indexed bonds High Quality
100% investment-grade portfolio
Fixed Income
Real Estate Fund U.S. REITs

Stocks/Bonds/Cash Alternative
Exposure to rising rental costs

Global Real Estate Fund Global REITs Stocks/Bonds/Cash Alternative
Exposure to rising global rental costs
Strategic Inflation Opportunities Fund Multi-asset mix

Ease of Use
Comprehensive, multi-strategy solution

Overall Portfolio
Global Gold Fund Gold company stocks Stocks/Bonds/Cash Alternative
Low correlation to traditional asset classes

Strategic Inflation Opportunities Fund:

The value of the fund's shares may fluctuate significantly in the short term. At any given time your shares may be worth less than the price you paid for them. Since inflation-indexed securities trade at prevailing real, or after-inflation, interest rates, changes in these rates affect the value of such securities owned by the fund. Generally, when real interest rates rise, the value of these securities will decline. The opposite is true when real interest rates decline. Debt securities also are subject to credit risk. Investment in debt securities issued by entities other than the U.S. Treasury or U.S. government and its agencies may increase the potential credit risk associated with the fund. The fund's commodity-related investments may be subject to greater volatility than investments in traditional securities. Investing in foreign securities has certain unique risks that make it generally riskier than investing in U.S. securities. Investing in securities of issuers located in emerging market countries generally is riskier than investing in securities of companies located in foreign developed countries. The fund is classified as non-diversified; therefore, it may be more volatile than if it was diversified.

Inflation-Adjusted Bond Fund, Short Duration Inflation Protection Bond Fund:

Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline.
Fund shares are not guaranteed by the U.S. Government.
The prospectus contains very important information about the characteristics of the underlying security and potential tax implications of owning this fund.

Global Gold Fund, Real Estate Fund, Global Real Estate Fund:

Due to the limited focus of these funds, they may experience greater volatility than funds with a broader investment strategy. They are not intended to serve as a complete investment program by themselves.
International investing involves special risks, such as political instability and currency fluctuations.
Understanding inherent risks such as interest rate fluctuation, credit risk and economic conditions are important when considering an investment in real estate.

Global Gold Fund:

Redemption of Institutional Class Shares, Investor Class Shares or R Class Shares within 60 days of purchase will be subject to a 1% redemption fee.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

The opinions expressed are those of American Century Investments (or the fund manager) and are no guarantee of the future performance of any American Century Investments fund. This information is for educational purposes only and is not intended as investment advice.

For detailed descriptions of indices or investing terms referenced above, refer to our glossary.

Ready to Invest?