Speaking at the first day of Investment Week's debut Alternatives Summit, he told delegates that despite markets forecasting we will soon be back into the post-GFC and pre-Covid world of "low and well behaved" inflation, there are several factors pointing to the opposite.
"There are credible arguments to think that we can be plagued by supply shocks from various angles over the next decade," he said.
"Be that from the repercussions of the commodity underinvestment cycle that we are in now, labour market and related wage price dynamics due to changes in the way that the global labour arbitrage has been exploited in recent decades."
Markets certain on Fed rate cut following 4.9% inflation in April
The manager of the Cohen & Steers Diversified Real Assets fund also pointed out how hard containing inflation has turned out to be, with elevated and sticky wage growth underpinning what is "high and difficult to move" core inflation data.
"The prospect that we move from a regime of completely stagnant developed world wage growth into something where wage price spirals remain, if not a persistent risk or a reoccurring risk, is not at all unrealistic to me," he said.
"People have been thinking we are going back to 2% inflation, and it is going to happen quickly, but then every quarter goes by, inflation has remained elevated. They keep saying that it is coming down and soon the job will be done."
The current rate of wage growth is so far away from where it was in the pre-Covid decade, he noted, which he said is "absolutely not consistent" with the idea of a 2% inflation rate.
"To me, the idea that people would anticipate a quick snap back to the old state of the world is somewhat mysterious," he added.
RSMR adds Cohen & Steers Diversified Real Assets to rated list
In the presence of adverse inflation shocks, real assets can help balance the tendency for heavy stock and bonds mix to deliver below average returns, he argued.
According to Childers, equity and fixed income exposure tends not to perform well when inflation rates are accelerating. Real assets, on the other hand, tend to generate a performance spread versus stocks and bonds "to varying degrees".
Moreover, he said that a diversified allocation to real assets, including some exposure to natural resource equities, can provide better inflation protection and lower market beta than infrastructure and real estate alone.