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The latter is a typical problem for optimal partial hedging in incomplete markets.
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Social Security, which increases with inflation, will provide a partial hedge.
A "partial hedge" can come from issuing dollar-denominated debt, which gets cheaper to service when the dollar weakens.
It should not be correlated with the movement of shares; it should throw off stable income from tenants; and it should be a partial hedge against inflation.That certainly sounds a lot more sensible than the fund's current plan, formulated in 2007, which emphasised property's ability to enhance returns and which lost nearly half its value between mid-2008 and mid-2009.
These days, though, holding off reinvesting is worth considering as a partial hedge against rising interest rates and falling prices.
This calls for an adaption of other, less conservative, concepts for partial (not almost-sure) hedging in incomplete markets to a framework that is robust with respect to model ambiguity.
Still hedging their bets?
No more expensive hedging.
Hedging their bets.
Maybe do some hedging.
HEDGE funds are supposed to hedge.
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