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Rating:Do Real-Return Funds Offer Real Returns? Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, November 29, 2010

Do Real-Return Funds Offer Real Returns?

News summary by MFWire's editors

Fundsters looking for protection during inflationary epriods may want to check out this past weekend's Wall street Journal Weekend Investor column, which offers investors alternatives to investing in TIPS.

According to the column, a new breed of "real-return funds" such as the Eaton Vance Short-Term Real Return Fund [see profile], Dreyfus Global Real Return [see profile], Loomis Sayles Multi-Asset Real Return [see profile], Pioneer Multi-Asset Real Return [see profile] and USAA Real Return [see profile] may provide better protection than TIPS alone.

Rather than invest solely in TIPS, these funds reportedly bet on other asset classes that have sensitivity to inflation such as commodities, bank loans, stocks, and emerging-market stocks and bonds.

The Eaton Vance Short-Term Real Return Fund is reportedly up 1.9 percent since its April 1 launch and the Dreyfus Global Real Return, which launched on May 12, is up 6.6 percent year-to-date.

However, buyer beware: Most of these funds have little to no track record and they are prone to heavy losses when global assets sell off in unison. For example: the Old Westbury Real Return [see profile] and Fidelity Strategic Real Return [see profile] funds lost 55 percent and 35 percent respectively during the financial crisis. 

Edited by: Hung Tran


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