Inflation has now persisted beyond most people's 2021 expectations for a “short term blip” following the COVID crisis, and investors are increasingly under pressure to generate positive real returns in the first highly inflationary (i.e., >5%) environment since 1991. We expect a degree of asset price volatility to continue across all asset classes for quite some time. In this note we look at the factors behind the current inflationary environment, evaluate which ones are likely to persist and which may fall away quickly, and estimate the relevance/importance of each. We conclude that the best opportunity for downside protection, as well as potential returns, comes from the only free meal in investing: diversification. By this we mean diversification across & with asset classes, across geography, and across strategies. We believe that this can be most effectively achieved through the use of investment trusts.