By Canada Life Investment Management | Oct. 19, 2023
We explored the realm of investment solutions that can thrive in inflationary environments with Vince Childers, Senior Vice-President and Lead Portfolio Manager for the Real Assets Multi-Strategy portfolio at Cohen & Steers. Childers explained how the Canada Life Diversified Real Assets Fund is designed to help your clients gain a competitive edge despite persistent inflation.
What’s in this article:
Boost real returns during inflationary periods: Real assets – such as real estate, commodities, infrastructure and natural resources – have the potential to perform well during periods of inflation, which are typically damaging to stock and bond returns. This can help boost a portfolio’s real returns.
Enhance diversification and reduce volatility: Their unique economic sensitivities can reduce volatility and enhance diversification for clients throughout the market cycle.
Historically attractive returns: They’ve provided attractive returns over a full market cycle, potentially improving risk-adjusted portfolio returns without sacrificing long-term growth.1 This can be appealing to clients looking for investment opportunities with the potential for attractive total returns.
In our increasingly complicated global economy, a return to the "old normal" may not occur right away – if at all. While the outlook for recession isn’t crystal clear, it’s possible that we could face an extended period of inflation with low growth, known as “stagflation”. Childers believes global markets have perhaps been too eager in pricing in a rapid return to low and stable inflation.
Cohen & Steers believes real assets offer attractive valuations and points to how they’ve historically defended well against stagflationary episodes. Another factor to consider is the scarcity of commodities. Underinvestment in this foundation of the economy could contribute to cost-push inflation. They recommend that investors consider the potential impact of these factors on their portfolio.
The fund includes a blend of four real asset classes: real estate, commodities, natural resources and infrastructure. This multi-strategy approach aims to help portfolios navigate market ups and downs and provides clients with exposure to a diversified range of real assets.
Real assets tend to outperform traditional investments when the economy is hit with unexpected inflation. That’s why maintaining a permanent, full-cycle allocation to real assets can potentially enhance risk-adjusted returns and reduce overall portfolio volatility.
Cohen & Steers is a leading global investment manager specializing in real assets and alternative income. With more than U.S.$80 billion in assets under management, it’s been dedicated to providing innovative and dynamic real assets investments solutions since its founding in 1986.
Since this unique asset class is its sole focus, you can be confident you’re offering the right real assets fund solution to your clients. Cohen & Steers uses dedicated specialist teams to manage each asset class, alongside an asset allocation team that keeps its eye on the overall portfolio.
Cohen & Steers’ investment approach incorporates a comprehensive blend of factors.
A proprietary asset allocation model sets the foundation, employing valuation metrics and tactical signals. These indications, rooted in valuation specifics and macro factors, are fused with risk forecasts via the Black-Litterman allocation framework, which helps them combine modern portfolio theory with their own views of expected returns.
The Asset Allocation Strategy Group reviews the model's output, adjusting for real-world events and refining the base model. This collaborative team meets regularly to assess current positions, performance and risks. Top-down asset allocation is further fine-tuned through discussions and insights from specialist teams. Finally, they select securities using bottom-up, fundamental analysis. They shape the size, or weights, of these investments based on how they’re thinking about the broader asset class.
- Check out these new resources for the Canada Life Diversified Real Assets Fund, and talk to your Canada Life wealth wholesaler for more information
- Watch this event on-demand
- Access the expertise of this investment manager with Canada Life™ funds: View fund feature sheet
This mandate will be available through a segregated funds policy on October 23, 2023.
The views expressed in this commentary are those of this investment manager as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice.
This fund is available through a segregated funds policy issued by The Canada Life Assurance Company or as a mutual fund managed by Canada Life Investment Management Ltd. offered exclusively through Quadrus Investment Services Ltd. Make your investment decisions wisely. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. A description of the key features of the segregated fund policy is contained in the information folder. Any amount allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value.
Canada Life and design, Canada Life Investment Management and design, and other marks followed by the TM symbol at first time of use are trademarks of The Canada Life Assurance Company (“Canada Life”). Other marks displayed in this piece are trademarks of a third party, and used with permission or under license. Canada Life Investment Management Ltd. is a subsidiary of Canada Life.