Modern Economics & Management Forum

This paper aims to explore the effectiveness of diversified asset allocation in combating inflation. By analyzing the mechanism by which inflation affects asset prices, and based on modern portfolio theory and other foundations, empirical research is conducted using historical data analysis methods. The results show that diversified asset allocation portfolios generally outperform single-asset portfolios in better withstanding inflation shocks and achieving asset preservation and appreciation. At the same time, practical strategies are proposed, including asset class selection, ratio adjustment, and dynamic rebalancing, along with an analysis of market, liquidity, and policy risks and their corresponding measures. The study confirms that diversified asset allocation is an effective way to combat inflation, but it requires reasonable risk management, and its application still needs continuous exploration and improvement