The latest portfolio from one of the world's best pension funds, Ontario Teachers, shows there is a true focus on real assets and inflation protection. If we add real-rate products, commodities and timberland, there is an allocation of $37.1 billion out of $116.3 billion. Think about it, 32% of the entire portfolio may be associated with inflation protection. This is up over the previous year which saw an allocation of $30.6 billion or 29%.
The OTPP will classify real assets as real estate, infrastructure and timberland, but we focus on the assets which are more closely aligned with inflation protection. Even if you use there definition and add commodities, the real asset/commodity exposure is 27%. This is still much higher than what you will see in many investment portfolios. Smart money is moving into inflation protection.
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