New BNY Mellon Strategy Addresses Inflation Risk

February 3, 2010 ( - BNY Mellon Asset Management has launched an institutional investment strategy designed for periods of rising inflation that aims to achieve long-term returns of 5% above the Consumer Price Index in the U.S.

The Real Asset Strategy invests in inflation-sensitive equities, inflation–linked bonds, and actively managed commodities – investments BNY Mellon noted historically have produced returns above the rate of inflation during past periods of rising inflation.  

According to a press release, the typical, strategic long-term weighting of assets in the Real Asset Strategy is:

  • 25% in global inflation-protected securities – These include U.S. TIPs (Treasury Inflation-Protected Securities) as well as similar securities issued in other countries managed by Standish Mellon Asset Management Company LLC;
  • 35% in a commodity alpha long-bias strategy – This is a risk-controlled commodities strategy with a volatility target of 10% that is managed by Mellon Capital Management;
  • 30% in global equities of natural resources companies – These investments are managed by The Boston Company Asset Management LLC (TBCAM);
  • 5% in equities of companies in emerging markets – These investments also are managed by TBCAM; and
  • 5% in global real estate securities – These investments are managed by Urdang Securities Management, Inc.

The Real Asset Strategy is available to certain qualified institutions who become clients of The Bank of New York Mellon.

“Many endowments, foundations and pension plans have not positioned themselves adequately to protect their portfolios against inflation,” said Jeffrey B. Saef, director, multi-strategy investment solutions for BNY Mellon Asset Management, in the press release. “While the threat of inflation is not immediate, institutions need to position their portfolios before inflation becomes a factor, or they will pay too much for inflation-hedging assets that we expect will quickly rise in value.” 

More information is at