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Fund Overview: Objective, Strategy and Holdings

  • The Inflation Protection Fund seeks to provide investors with current income and protect principal from loss of purchasing power due to inflation.
  • The Fund holds a combination of U.S. and foreign fixed income securities. The Fund also invests in commodity futures contracts and holds senior secured loans.
  • The Fund generally does not invest in companies that derive more than 10% of their revenue from gambling or from the manufacture, sale or distribution of alcoholic beverages, tobacco-related products, adult entertainment, weapons, or the management or operation of prison facilities.

Fund Managers

The following individuals are responsible for the selection and monitoring of external asset managers:

Frank Holsteen Image

Frank Holsteen

Managing Director, Investment Management

  • With Wespath since 2012
  • B.A. from Lake Forest College
Nízida Arriaga Image

Nízida Arriaga, CFA

Manager, Fixed Income

  • With Wespath since 2019
  • Bachelor's degree from the University of Puerto Rico-Mayagüéz
  • MBA from the University of Wisconsin-Madison

Management

The Inflation Protection Fund (IPF) invests with eight external investment firms that invest in assets that are expected to provide returns in excess of inflation over time. The Fund has 35% of its assets allocated to an enhanced U.S. TIPS strategy. The remainder is invested mostly in active strategies that hold inflation-linked bonds from both developed and developing countries. The Fund also attempts to modestly improve investment returns by investing up to 10% of its assets in commodity futures contracts, up to 10% in senior secured loans, and up to 10% in real assets and alternative investments.

External Asset Managers

* Signatory to the United Nations Principles for Responsible Investment

 

Please refer to the Investment Funds Description – P Series for a detailed description of the investment strategies used in managing the Fund.

IPF Benchmark


The Inflation Protection Fund performance benchmark is 80% Barclays World Government Inflation Linked Bond Index (Hedged), 10% Barclays Emerging Market Tradeable Inflation Linked Bond Index (Unhedged) and 10% Bloomberg Commodity Index, effective January 1, 2016.The Barclays World Government Inflation Linked Bond Index (Hedged) measures the investment performance of a portfolio of developed market investment grade government inflation-linked debt. The Barclays Emerging Market Tradeable Inflation Linked Bond Index measures the investment performance of a portfolio of local currency Emerging Markets inflation-linked government debt. The Bloomberg Commodity Index measures the investment performance of a broadly diversified portfolio of futures contracts on physical commodities. From January 1, 2006 to December 31, 2015, the benchmark was the Barclays Capital U.S. Government Inflation Linked Bond (Series B) Index. From April 1, 2005 to December 31, 2005, the benchmark was a blended index based on the following weightings: Barclays Capital U.S. Government Inflation-Linked Bond Index (50%) and Barclays Capital Global Inflation-Linked Bond Index (50%). Prior to April 1, 2005, the benchmark was the Barclays Capital U.S. Government Inflation-Linked Bond Index.

Fund Snapshot
Inception January 5, 2004
Exp. Ratio 0.48% for 2019
Benchmark IPF Benchmark
Fund Assets $2,043 Million as of September 30, 2020
Holdings June 30, 2020
Unit Price History Wespath Funds Price History
For More Information Investment Funds Description – P Series

Relative level of risk compared to other Wespath Funds

Graphic of relative level of risk compared to other Wespath Funds.

Performance, net of fees (as of 09/30/2020)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Inflation Protection Fund 3.44% 2.19% 3.92% 3.42% 3.78% 2.85%
IPF Benchmark 2.02% 3.81% 2.66% 4.56% 5.05% 3.83%

Universe Comparison

Inflation Protection Fund vs. Peer Group Universe

Peer Group Performance Comparison

Peer group performance comparison

Annualized Performance (Net-of-Fees)

  1 Year 3 Year 5 Year 10 Year
Inflation Protection Fund 1.46% 2.74% 2.41% 2.95%
Median 6.59% 4.01% 2.94% 2.66%
Rank in Universe 92nd 76th 67th 33rd
# of Observations 209 194 169 110

Peer Group Performance Comparison and Annualized Performance (Net-of-Fees) data as of June 30, 2020.

Source: Lipper. Lipper Inflation Protection Funds Universe is a group of mutual funds comparable to IPF. The Lipper Universe used for this comparison was Inflation Protected Bonds.

See Risk and Disclosures for more information regarding Net of Fees Performance.

IPF Benchmark

The Inflation Protection Fund performance benchmark is 80% Barclays World Government Inflation Linked Bond Index (Hedged), 10% Barclays Emerging Market Tradeable Inflation Linked Bond Index (Unhedged) and 10% Bloomberg Commodity Index, effective January 1, 2016.The Barclays World Government Inflation Linked Bond Index (Hedged) measures the investment performance of a portfolio of developed market investment grade government inflation-linked debt. The Barclays Emerging Market Tradeable Inflation Linked Bond Index measures the investment performance of a portfolio of local currency Emerging Markets inflation-linked government debt. The Bloomberg Commodity Index measures the investment performance of a broadly diversified portfolio of futures contracts on physical commodities. From January 1, 2006 to December 31, 2015, the benchmark was the Barclays Capital U.S. Government Inflation Linked Bond (Series B) Index. From April 1, 2005 to December 31, 2005, the benchmark was a blended index based on the following weightings: Barclays Capital U.S. Government Inflation-Linked Bond Index (50%) and Barclays Capital Global Inflation-Linked Bond Index (50%). Prior to April 1, 2005, the benchmark was the Barclays Capital U.S. Government Inflation-Linked Bond Index.

Allocations

Holdings-Based Sector Allocations as of September 30, 2020

Sector IPF Actual (%) IPF Benchmark (%) Difference (%)
TIPS 53.8% 36.1% +17.7%
Global Inflation-Linked Bonds (Developed) 12.5% 43.9% -31.4%
Senior Secured Loans (Floating Rate) 9.1% 0.0% +9.1%
Emerging Market Inflation-Linked Bonds 8.6% 10.0% -1.4%
Commodities 8.8% 10.0% -1.2%
Real Assets and Alternative Investments 4.3% 0.0% +4.3%
Cash 2.9% 0.0% +2.9%

 

Characteristics

Characteristics as of June 30, 2020

  IPF IPF Benchmark
Effective Duration 7.87 12.16
Effective Convexity 0.40 1.86
Real Yeld to Worst* 0.0% -0.5%
Effective Maturity 9.02 13.32

* Does not reflect the deduction of fees.


Fund Distribution by Credit Quality as of June 30, 2020

IPF Fund Distribution by Credit Quality

Risks & Disclosures

All investments carry some degree of risk that will affect the value of the Fund’s holdings, its investment performance and the price of its units. As a result, loss of money is a risk of investing in the fund. IPF is subject to the following principal investment risks: market risk, investment style risk, security-specific risk, credit risk, country risk, currency risk, derivatives risk, interest rate risk, deflation risk, liquidity risk and prepayment risk.

Because U.S. Treasury Inflation Protected Securities (TIPS) are debt obligations issued and backed by the full faith and credit of the U.S. Government, they are considered to have low credit or default risk. Inflation Protected Securities issued by foreign governments, particularly governments of emerging countries, risk the possibility of loss due to credit risk.

Historical returns are not indicative of future performance. For further discussion of the Fund’s investments strategies and risks, please refer to the Investment Funds Description – P Series. This is not an offer to purchase securities.

Lending of Portfolio Securities

The Fund seeks to earn additional income by lending a portion of its portfolio securities to brokers, dealers and other financial institutions. The loans are secured at all times by cash and liquid high-grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. In addition, losses could result from the reinvestment of the cash collateral received on loaned securities.

Expense Ratio

All expenses of the Fund are deducted from the Fund’s net asset value. The expenses include investment management fees, operating expenses, bank custodial fees and miscellaneous Fund administration expenses. These expenses are paid directly by IPF, and are reflected in the unit price calculated for the Fund. The unit price is multiplied by the number of units held in each client’s account to determine the total value of the client’s holdings in the Fund. For 2019, IPF’s expenses were 0.48% of the Fund’s total assets.