When inflation is expected to be high, investors tend to avoid?

When inflation is expected to be high, investors tend to avoid long-term fixed-income investments because these types of investments typically offer fixed interest rates that do not adjust with inflation. As inflation rises, the real value of the returns on fixed-income investments decreases. This means that the purchasing power of the interest payments received diminishes over time, making these investments less attractive.

Investors are more likely to seek alternatives that can provide some protection against inflation, such as equity investments or short-term investments that can be adjusted more frequently to reflect current economic conditions. In contrast, long-term fixed-income investments lock investors into rates that could be significantly below the inflation rate, reducing their overall return on investment. Therefore, avoiding long-term fixed-income investments during times of expected high inflation is a common strategy among cautious investors.