The objective of this model is to hold securities that have a higher correlation to inflation and/or own tangible/hard assets. The model is broadly diversified and has a bias to income producing hard assets. It is expected to produce positive real returns in a higher inflation environment.
REAL ASSET MODEL CORE-SATELLITE IMPLEMENTATION
A Core and Satellite approach has been used to build this model, with the Core including low cost, primarily market capitalization weighted ETFs across four main segments of the market: 1) Real Estate Investment Trusts 2) Infrastructure/Master Limited Partnerships 3) Commodities & Precious Metals and 4) Inflation Linked Fixed Income. The Satellite allocations include ETFs that track alternative indices, attempting to add alpha over the Core indices. Examples include dividend weighted ETFs, sector/thematic ETFs, long/flat[/glossary] commodity indices, fixed duration inflation indexed ETFs, actively managed senior bank loan ETFs, etc.
REAL ASSET MODEL COST SUMMARY
- The weighted average cost of the Real Asset Model is 0.76%
- This compares very favorably to the Morningstar Category Average of World Stock Mutual Funds of 1.45% (Source: Morningstar Direct)
- This is a reduction of 47% when compared to active money manager costs!