According to the announcement, the fund aims to provide total returns that exceed the rate of inflation over a full market cycle. The fund will be managed by Janus Capital Management LLC in partnership with Armored Wolf, LLC.
Gibson Smith, Co-CIO, Fixed Income for Janus, believes many investors are not prepared to deal with the potential of higher inflation and the loss of purchasing power that may accompany it. “As a nation, we are being forced to deal with the outcomes related to reflationary policy, a growing money supply, rising commodity prices and a rapidly expanding national budget deficit.” said Smith, in making the announcement. “This new fund is aimed at helping investors confront inflation concerns.”
The Janus Real Return Allocation Fund will invest primarily in real asset strategies designed to generate attractive absolute, risk-adjusted returns while providing an active hedge against inflationary trends. The fund will allocate its assets among six sleeves: inflation-linked bonds, commodities, emerging market debt, emerging market equity, global real estate and short-term bonds. Each of these underlying sleeves is actively managed by portfolio managers at Janus and Armored Wolf.
According to John Brynjolfsson, Managing Director of Armored Wolf, traditional inflation-protected bond funds may not be enough to protect investors in a highly inflationary environment. “With the current rate of inflation at historically low levels, investors should prepare for higher levels of inflation in the coming years,” said Brynjolfsson. “I think it’s going to be important to invest in multiple asset classes that exhibit low historical correlations to equity and fixed income markets as a hedge against rising inflation.”
Primary oversight of Janus Real Return Allocation Fund will be provided by an allocation committee consisting of Smith and Brynjolfsson. They are responsible for determining the allocations between each sleeve as market conditions dictate.
“We are looking forward to our partnership with Armored Wolf on this new strategy,” said Smith. “It is clear during his 19-year career at PIMCO followed by his founding of Armored Wolf, John has distinguished himself as an expert in alternative real assets, commodities, global inflation-linked bonds, and asset allocation strategies. Together we can leverage our individual strengths in a collaborative effort to help shield against the negative effects of inflation.”