Pimco adds fund using multi-asset approach to hedge inflation risks

By Susanna Moon

Chicago, Sept. 20 - Pimco said it launched the Pimco Inflation Response Multi-Asset fund for investors looking to hedge global inflation risks and take advantage of returns that inflation dynamics offer.

The fund uses a multi-asset approach to identify and hedge risk to protect against inflation and try to take advantage of it, by investing in a range of assets that might respond to different types of inflation, such as Treasury Inflation Protected Securities, commodities, emerging market currencies, real estate investment trusts and gold, according to a press release.

Pimco said it actively manages the asset allocation and underlying investments, and incorporates tail risk hedging strategies intended to limit the impact of severe market shocks.

These strategies are designed to protect against downside risk while positioning inflation-related assets to benefit from inflation dynamics. Pimco defines tail risks as widespread, severe market declines, the release noted.

"We believe that investors should always be prepared for the risk of rising inflation. In fact, although commodity prices have eased lately, we see them continuing to rise over the next few years," Mihir Worah, the fund's manager and a managing director in Newport Beach, Calif., said in the release.

"A weakening U.S. dollar combined with what we see as the Federal Reserve's inflationary bias will also add to this longer-term inflation pressure," Worah said.

A long-term trend in rising commodity prices and weakening currencies of developed nations are stoking global inflation concerns, yet many investors own assets that are not highly correlated to inflationary pressure, the release said.

"Traditional inflation hedges often don't provide an effective response to the wide-ranging drivers of inflation," Worah added.

Institutional shares of the fund will trade under the ticker symbol "PIRMX."

Pimco is an investment management firm based in Newport Beach, Calif.

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