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Principal launches fund to help investors manage inflation

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Principal Funds has launched the Principal Diversified Real Asset Fund to help investors manage the impact of inflation on their purchasing power and further diversify traditional portfolios of stocks and bonds.

"Investors face many risks: the familiar risks of market volatility and outliving their money and the not so familiar risk of inflation," says Mike Finnegan, Principal Funds chief investment officer and portfolio adviser of the Principal Diversified Real Asset Fund. "We look at inflation risk as an ever-present risk that all investors should take into consideration."

The fund, launched on 16 March, blends five inflation-hedging strategies managed by specialist sub-advisers.

Similar to the Principal Global Diversified Income Fund, the fund uses a multi-manager, multi-disciplined approach and rules-based rebalancing.

Asset classes, sub-advisers, target allocations and ranges in the fund include: Treasury inflation-protected securities, BlackRock Financial Management – 30 per cent (+/- eight per cent); commodities, Credit Suisse – 25 per cent (+/- eight per cent); US real estate investment trusts, Principal Real Estate Investors – 20 per cent (+/- five per cent); natural resource stocks, Jennison Associates – 15 per cent (+/- five per cent); and master limited partnerships, Tortoise Capital Advisors – ten per cent (+/- five per cent).

The Principal Diversified Real Asset Fund is the second in a series of funds designed to help financial professionals build more reliable retirement income portfolios for their clients.

The first in the series is the Principal Global Diversified Income Fund, launched on 15 December 2008.

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