Investment researcher Morningstar has launched a new index that would hold up against inflation.
According to a press release, the Morningstar US Real Asset Index will hold a portfolio of traditional assets used to hedge against inflation, including Treasury inflation protected securities 40%, real estate investment trusts 15% and commodity stocks 15% and futures 30%.
“Inflation erodes the value of financial assets,” Sanjay Arya, senior vice president of Morningstar Indexes, said in the press release.
Inflation translates to losses in a traditional investment portfolio as it would diminish the value of dollars spent. Consequently, investors are looking at ways to hedge against inflationary risks, like real assets that derive their value from an underlying physical asset. Additionally, TIPS assets hold up during inflationary periods as the securities are tied to the Consumer Price Index.