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.

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.”

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.”