The First American Protected Securities Fund, offered in Class A, C, Y, and R shares, will invest up to 80% of its net assets in inflation-protected debt, which can help protect against inflation by adjusting coupon payments in line with changes in inflation. The fund will also protect against the ‘phantom income tax’ commonly associated with investments in inflation-protected debt securities, according to a press release. The fund can also add much-needed diversification to a portfolio due to a low correlation with returns in other asset classes, according to the news release.
Inflation-protected debt can be issued by governments and corporations and commonly keeps pace with inflation through periodic recalculations of the underlying principal based on the Consumer Price Index. With a change in the underlying principal amount comes a change in the returns seen on a fixed coupon rate.
The new Class A shares will have a maximum front-end load fee of 4.25%, according to the release. Class C shares will have a maximum back-end load fee of 1%.
The First American Funds, advised by the US Bancorp Asset Management group, is the fifth-largest proprietary fund family in the US, with $55.3 billion in open-ended funds.