In an economic downturn, what abilities do institutional assets have vs. the mom & pop to get out ahead? Tune in above as Robert Smith of Peregrine Private Capital walks through the ins and outs of institutional investments, and why to consider investing in one today!

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Disclaimer: All my opinions are my own. These statements are not meant to be taken as investment advice….(read more)

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Institutional investors manage large sums of money on behalf of organizations like pension funds, insurance companies, and endowments. Their primary goal is to generate returns while minimizing risk. However, with the constant threat of inflation, investors must consider the safest ways to invest their assets.

Inflation is a measure of the rate at which prices for goods and services rise over time. Inflation reduces the purchasing power of money, making investment returns less valuable. For institutional investors, this means that inflation poses a significant risk to their long-term portfolio returns.

One of the safest ways for institutional investors to invest in the current environment is to focus on fixed-income securities. These securities include bonds from highly rated issuers such as governments, corporations, and other financial institutions. Fixed-income securities provide regular and predictable income streams and offer diversification that can protect against inflation.

Another strategy for institutional investors to mitigate the effects of inflation is to invest in real assets like real estate, infrastructure, and commodities such as gold. These assets have historically performed well during inflationary periods, as they tend to maintain their value over time. Real assets also offer diversification and can serve as a hedge against stock market volatility.

Institutional investors can also consider investing in inflation-protected securities such as Treasury Inflation-Protected Securities (TIPS). These securities provide a guaranteed return that adjusts for inflation, ensuring the purchasing power of their returns remains constant over time.

Investing in high-quality stocks can also be a suitable strategy for institutional investors to hedge against inflation. Companies with strong financials tend to perform well during inflationary environments, as they can increase prices to maintain profitability. However, it’s important to note that investing in equities can be more volatile than investing in fixed-income securities, particularly in the short-term.

In conclusion, institutional investors should focus on creating a diversified investment portfolio that includes fixed-income securities, real assets, inflation-protected securities, and equities. Creating a strategy that incorporates asset classes that historically outperformed during inflationary periods is essential to ensure the long-term success of their investment portfolios. By investing intelligently, institutional investors can hedge against the effects of inflation and secure the purchasing power of their assets over time.