Pensions Wanted Yield From Real Assets. Now They Want Inflation Protection

In the endless quest for yield, state pensions have been quietly moving a significant amount of money into real assets over the last decade. Now they are hoping these investments can protect them from inflation. 

Between 2011 and 2021, institutional investors increased their aggregate allocations to real assets — including commodities, precious metals, real estate, and natural resources — by 7.8 percent, according to a new report from Wilshire Associates on state retirement systems. Total public pension plan allocations to U.S. and non U.S. equity and fixed income decreased by 2.5 percent during the same period. 

State pensions cut fixed income as rates fell. “Most investors are aware that yields across fixed income have been falling pretty much for the past 10 years,” Ned McGuire, managing director at Wilshire, told Institutional Investor. 

Published by in Institutional Investor.