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How Fidelity Can Help You Combat Inflation

Even modest levels of inflation can erode the purchasing power of your portfolio over time, but a number of Fidelity mutual funds can help mitigate the negative impacts of inflation on the value of your portfolio and income stream, including:

  • Inflation-linked securities, whose value is adjusted based on an official inflation rate, such as inflation protected securities issued by the U.S. Treasury.
  • Inflation-sensitive investments that have tended historically to fare well during inflationary periods, such as commodities, real estate, high yield floating rate loans or bonds, and high grade securities with short durations.
  • Combined strategies with inflation-fighting asset classes that have the potential to perform better than any single type of investment represented in their mix.

The U.S. Treasury offers securities whose principal is adjusted by changes in the Consumer Price Index (CPI).* They pay interest twice a year at a fixed rate that is applied to the adjusted principal so that interest payments rise with inflation and decrease with deflation. When these securities mature, they pay the inflation-adjusted principal or the original principal, depending on which is higher.

Spartan Inflation-Protected Bond Index Fund (FSIYX)
Fidelity Inflation-Protected Bond Fund (FINPX)

The performance of inflation-sensitive investments has tended historically to fare well during periods when strong demand has driven increases in the market price for their underlying investments, such as food, gasoline, real estate, and the commodities used to produce finished goods and services ranging from houses and cars, to clothes and entertainment.

Fidelity Global Commodity Stock Fund (FFGCX)
Fidelity Real Estate Income Fund (FRIFX)

Learn more about commodity and real estate funds.

Because stock markets have tended to reflect the improving economic health that can lead to inflation, you may want to consider whether a dividend-oriented stock fund could be a good inflation hedge for your income needs.

Fidelity Equity-Income Fund (FEQIX)

Learn more about domestic stock and equity income funds.

During periods of rising prices, the types of leveraged companies that are rated non-investment-grade or "high yield/high income" have typically had an easier time generating the revenue needed to handle their relatively heavy burden of debt than during periods when their ability to raise prices and revenues is constrained. Please keep in mind, high yield/non-investment grade securities involve greater price volatility and risk of default than securities of investment grade issuers.

Fidelity High Income Fund (SPHIX)

Learn more about high income funds.

Investing in a combination of securities with inflation-fighting ability has the potential to perform better than any single type of investment represented in their mix, and may be a convenient way to take a diversified approach to help protect the purchasing power of your fixed income investments.

Fidelity Strategic Real Return Fund (FSRRX) invests primarily in a combination of securities with inflation-fighting potential, such as U.S. Treasury Inflation Protected Bonds, floating rate loans, commodity-linked notes and related investments, and real estate-related securities, including real estate investment trusts (REITs).

Fidelity Strategic Dividend and Income Fund (FSDIX) uses a neutral mix of approximately 50% common stocks, 15% REITs and other real estate related investments, 15% convertible securities, and 20% preferred stocks.

Learn more about asset allocation funds.



a quantitative measure that indicates the degree to which a bond or bond fund’s price will fluctuate in response to changes in comparable interest rates


Fidelity Learning Center

Learn more about fixed income and bonds.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Past performance is no guarantee of future results.
* As measured by the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (CPI-U): U. S. City Average, by expenditure category and commodity and service group (not seasonally adjusted).
Asset Allocation does not ensure a profit or guarantee against loss.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Increases in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.
Leverage can increase market exposure, magnify investment risks, and cause losses to be realized more quickly. The performance of the fund and its index may vary somewhat due to factors such as transaction costs, sample selection, and timing differences associated with additions to and deletions from its index.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.
Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks.
The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions. The fund may have additional volatility because it can invest a significant portion of assets in securities of a small number of individual issuers.
Value stocks can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.
Floating rate loans may not be fully collateralized and therefore may decline significantly in value. A floating rate loan may not be fully collateralized which may cause the loan to decline significantly in value. A floating rate loan is generally subject to restrictions on resale. Difficulty in selling a floating rate loan may result in a loss. Interest rate increases can cause the price of a debt security to decrease. Increases in real interest rates can cause the price of inflation-protected debt securities to decrease.