(Bloomberg) — Commodities are the most underused hedge against inflation as the economy expands and prices rise, said Bridgewater Associates executive Karen Karniol-Tambour.

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“You’re looking at assets that are going to do well as the economy grows and inflation pressures are strong,” Karniol-Tambour, the firm’s co-chief investment officer for sustainability, said Wednesday in a Bloomberg Television interview.

Karniol-Tambour said she likes metals and carbon credits because they’re exposed to both cyclical strength and new measures aimed at combating climate change.

She also said the Federal Reserve will struggle to contain inflation, even if it decides to boost rates five times this year. Excess liquidity has led to rich valuations in technology stocks and cryptocurrencies, and U.S. stocks are some of the least attractive relative to other equity markets, she said.

“U.S. stocks in particular are some of the most susceptible to liquidity removal,” she said. “Valuations just look a lot better in a lot of other countries.”

In October, Karniol-Tambour said most portfolios were insufficiently hedged for inflation and that investors should switch nominal bond holdings to inflation-linked bonds to better guard against rising prices. Formerly director of investment research at Westport, Connecticut-based Bridgewater, she was named to her current post in April, helping to run the firm’s sustainable-investing venture along with Carsten Stendevad.

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