A client in her 40s is concerned about potential inflation and wants to invest $100,000 (10 percent of her total investment portfolio) in mutual funds that will provide a hedge against inflation. She is willing to invest for five years or longer and is comfortable with market volatility.
What research tools do you use to identify prospective funds for clients?
We have a number of things. We have things as simple as using Morningstar Principia Pro, which gives a lot of great beginning analysis for us on mutual funds. We use the Bloomberg Terminal to really go many steps further in that analysis.
Before we actually use the funds, we take it another step further and actually go over the data with the managers themselves and make some decisions.
What specific fund categories would you recommend for this scenario, and why?
There would be a couple of things to look at. The one you would probably hear the most from everybody would be TIPs. That would be one piece certainly that should be part of the equation in this case, but I don’t think it should be the only piece.