The correlation benefits of traditional ‘balanced’ portfolios have been central to their success in delivering strong risk-adjusted returns since the 1980s. Central banks created an environment of falling interest rates and low inflation. Bonds acted as effective offsets in falling equity markets. But the game has changed. A new market regime demands a change to the art of portfolio construction. The return of inflation volatility represents the most challenging and significant paradigm shift in decades. Portfolio construction practitioners are going to have to look much harder to fi...