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Nonprofits Lack Strong Inflation Protected Investment Strategies
added: 2007-05-16

A Quick Poll released reveals that while virtually every nonprofit (95%) lists preservation of purchasing power as a key investing goal, less than half (47%) of those polled said their organization currently invests even 10 percent of its overall portfolio in inflation protected asset classes. The poll was designed to gain insight into how nonprofits prioritize inflation protection and what they are doing to manage against inflation.

Results point to either a lack of awareness or availability of investment tools relating to inflation protection.

"When it comes to inflation protection in the nonprofit space there's a clear disconnect between stated goals and the strategies and measures available to help achieve those goals," says Carolyn McLaurin, Senior Vice President of SEI's Foundation and Endowment Group. "Nonprofits need access to stronger tools - ones that will provide a more holistic view of how a wide variety of market scenarios impact their portfolios. This will get them to a place where they can take advantage of new asset classes and further protect against inflation."

SEI's research shows that nonprofits continue to use relatively standard measures for gauging inflation movement. An overwhelming majority (88%) of the nonprofits polled used at least the Consumer Price Index (CPI) in gauging the costs of the obligations of their organization against inflation. An overwhelming majority (70%) of the investment committees considered the movements of inflation through "long-term forecasting based on capital market assumptions. More than half (58%) use "historical inflation statistics."

The poll showed that smaller nonprofits, those with less than $50 million in assets, face the biggest challenge implementing inflation protection strategies - only 12 percent have assets invested in real estate, TIPS (Treasury Inflation Protected Securities), or energy. No one from that group is invested in bank loans. On the converse, the poll showed that educational institutions are the most actively invested in inflation protected asset classes, particularly real estate.


Source: PR Newswire

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