Products January 17, 2013

Index Benchmarks Inflation-Hedged Investments

Morningstar Inc. rolled out the Morningstar US Real Asset Index, a diversified portfolio of liquid assets that traditionally provide a hedge against inflation.
Reported by

The portfolio includes Treasury inflation-protected securities (TIPS), real estate investment trusts (REITs), and commodity stocks and futures.

The Morningstar US Real Asset Index will allow investors to better benchmark their real return investments and gain a deeper understanding of the benefits of adding a broad spectrum of inflation-hedged assets to their portfolios.”

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The index consists of liquid assets that can be accessed easily in public markets. The index holds approximately 40% TIPS, 30% commodities futures, 15% REITs, and 15% commodity stocks, including both companies involved with resource extraction and master limited partnerships (MLPs) engaged in resource transportation and processing. Morningstar reconstitutes the index semi-annually.

“While inflation has been low overall in recent decades, the cost of items retirees consume—health care, gas, food—has been rising at a fast clip,” said Sanjay Arya, senior vice president of Morningstar Indexes. “Investors have been showing a great deal of interest in holding a variety of investments that keep pace with inflation and add portfolio diversification, and the investment industry is paying attention. Since early 2010, more than 20 new funds have been launched that allocate between several real asset classes.”

Data & Research January 17, 2013

Cerulli Finds Increased Interest in ESG Investing

Research from Cerulli Associates shows increased interest in environmental, social and governance (ESG) investing, and not just among nonprofit organizations.
Reported by

“A trend we have seen over the past 12 months is increased requests for ESG investments in institutional product lineups,” said Michele Giuditta, associate director at Cerulli. “The other two most-requested products were emerging market and long-duration fixed-income products.”  

Cerulli notes that institutional investors are continuing to move away from traditional asset classes in search of higher returns and greater diversification in response to uncertainty in the global economy and capital markets.  

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“We have found that many large public pension funds are adopting processes for integration of ESG investments into their portfolio,” Giuditta explained. “As institutional markets become increasingly competitive, asset managers are finding ways to diversify their offerings, and socially responsible investing is one form of diversification we are seeing.”  

These findings are noted in the “Cerulli Quantitative Update: U.S. Institutional Markets 2012: Implementing Effective Sales, Service and Product Strategies.” This annual report looks at institutions’ current use and future appetite for collective investment trusts (CITs), exchange-traded funds (ETFs) and hedge funds. It provides market sizing data for each institutional market—endowments and foundations, public and private defined benefit (DB) and defined contribution (DC), and insurance general accounts.  

Information about how to purchase the report is here.

«