When does a real asset protect against inflation?

It is often assumed that holding real assets protects against inflation. But this normally depends on two parameters: The elasticity of the nominal income provided by the real asset to inflation; The reaction of the long-term interest rate to inflation. The elasticity of the nominal income provided by the asset to inflation must be greater than the sensitivity of the long-term nominal interest rate to inflation for the real asset to protect against inflation. When we look at equities and residential real estate, we see: An over-indexation of dividends to inflation in the United States and the euro zone; equities therefore normally protect against inflation; A significant under-indexation of long-term interest rates to inflation; Very strong under-indexation of rents to inflation; residential real estate therefore does not protect against inflation.