Consultants Rate REITs as a Top Inflation Hedge

By Jason C. Flynn

Investment consultants consider REITs a top inflation-hedging vehicle, according to a study from investment management firm PIMCO.

PIMCO's 4th Annual Defined Contribution (DC) Consulting Support and Trends report lists REITs, along with TIPS, commodities and equities, as a vital portion of inflation hedging in a DC plan. The study surveyed 30 of the largest consultants in the United States, serving nearly 2,000 plan sponsors with aggregate assets of $1.7 trillion, almost 40 percent of the $4.3 trillion DC market. Of the firms surveyed, 80 percent believe that it is "critical" or "very important" to provide inflation hedging in a DC plan.

Kurt Walten, senior vice president of investment affairs & investor education for NAREIT, explained that the survey is a clear sign of how important REITs are to a defined contribution plan.

"PIMCO's annual defined contribution survey always does an excellent job of capturing the trends within the DC consulting community," Walten said. "And, as in past surveys, this year's results again validate that consultants have embraced REITs and their importance within defined contribution plans, including 401(k) plans."

The survey also indicated that consulting firms are vastly expanding their services for the DC plan market. In the last year, the percentage of consulting firms that reported having a dedicated DC consulting team increased from 59 percent to 80 percent. Of the firms that currently lack a dedicated DC team, only 33 percent have completely ruled out creating one in the future.

For access to the survey, CLICK HERE.