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Time to Give Up on Multiasset Inflation-Protection Funds?

Despite disappointing results, there's still an argument for these distinctive funds.

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We recently released a study of the generally disappointing results that much-hyped objectives-based investments have delivered to investors. A summary of the research can be found on Morningstar.com, and the full paper is on our corporate site. Today's article looks more closely at multiasset inflation-protection funds.

Inflation is often equated to a tax that erodes investors' future purchasing power, and even periods of relatively low and steady inflation can accumulate to become significant drags on real returns over time. The current low-inflation environment has damped investor interest in inflation-fighting funds in recent years; a marked negative turn in performance, driven by the large commodities stakes commonly used in many of these funds, hasn't helped asset flows, either. But an unprecedentedly accommodative Fed rate policy following the global financial crisis did spark a flood of new products in anticipation of a money-supply-fueled jump in inflation; of the 31 multiasset funds that we classify as having an inflation-protection objective, 25 were launched between 2010 and 2014.

Janet Yang, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.