In a bid to compensate for low equity returns and protect investors’ portfolios from the corrosive effects of inflation, Cohen & Steers has launched the Real Assets Fund.
The actively managed fund will hold commodity, natural resources and REIT securities. It will diversify those with about a 10% allocation to gold, and a fixed-income piece. The New York-based real estate investment specialist will not peg the fund’s performance to CPI, because it thinks that index does not fully measure true economic inflation. Other components like medical expenses, college costs and even gasoline, have bigger impacts on the dollar’s buying power and investors’ wallets, according to the firm. Cohen & Steers plans to use CPI plus 4% as its inflation benchmark for the fund, a company spokesperson said.
Financial planners and RIAs do not always have permanent allocations to commodities and other real assets, because those securities are more volatile during trading, says Anthony D. Ialeggio, a senior vice president and director of global marketing at Cohen & Steers. That’s why the firm aimed to create a format advisors and investors would find comfortably familiar, he says.
“The objective is not to take big bets, but be able to get diversified exposure,” says Yigal D. Jhirad, a senior vice president and portfolio manager of the Cohen & Steers Real Assets Fund. “We’re trying to deliver a risk-based solution.”
Donna Mitchell writes for Financial Planning.