Philadelphia based Nationwide Mutual Insurance has launched a new mutual fund, the Nationwide Inflation-Protected Securities Fund (NIFAX/NIFIX), which is sub-advised by Nationwide Asset Management.
The fund has been developed and designed to cater investors with inflation protection as well as a liquid and low-risk investment option which can offer additional diversification, said the wealth manager.
Nationwide Funds Group president Michael Spangler said inflation protected securities play a crucial role in lowering volatility in an investor’s long-term asset allocation strategy.
"The Nationwide Inflation-Protected Securities Fund provides an additional hedge against future inflation without requiring investors to take on additional credit risk," Spangler added.
In the US, the most common inflation-protected securities are Treasury Inflation Protected Securities (TIPS), which yield income and offer inflation-adjusted interest and principal payments.
TIPS follow a designated inflation index including the Consumer Price Index and apply a fixed coupon rate to their principal, causing the principal value and interest payments to increase as inflation rises.
The Nationwide Inflation-Protected Securities Fund will mainly invest in TIPS as they have a lower risk profile and, when used in a portfolio with other investments, can help reduce overall portfolio volatility, claims Nationwide.
Subsequently, the new fund will also work as an underlying fund option in which the Nationwide Target Destination Funds may invest in order to obtain greater TIPS exposure.
"We feel investors will benefit from the additional diversification and potential protection from inflation they can achieve by investing in the Nationwide Inflation-Protected Securities Fund," Spangler added.
The Nationwide Inflation-Protected Securities Fund A Shares require a minimum investment of $2,000 and are expected to have an annual expense ratio of 0.80%.