Targets Treasury inflation-protected securities and RE investment trusts. In a bid to erect a barrier against inflation, Wilmington Trust is expanding the scope of its "Multi-Manager Real Asset Fund" to include investments in a diverse mix of inflation-linked bonds, real-estate securities and commodities.

This new breadth of investment avenues gives "shareholders greater diversification and a better weapon in the battle against inflation," says Neil Wolfson, chief investment officer at Wilmington Trust Investment Management.

Erosion

The move comes amid a spate of jitters over inflation, which have been "the catalyst of the financial markets' recent volatility as well as the 16 interest rate hikes implemented by the Federal Reserve in the past 24 months," according to a Wilmington press release.

Even moderate inflation can sap an investors' account values. Over 20 years, an annual inflation rate of just 3% a year will erode the purchasing power of $1 million to just $550,000 in today's dollars. Compounding the problem, when dividend yields on stocks are low, as they are today, the likelihood of negative inflation-adjusted returns on stocks increases. Such an occurrence would further weaken the ability of stocks to provide inflation protection.

"Inflation may very well rise over the next several years from its current low levels, and perhaps by more than investors expect," says Wolfson.

The Real Asset Fund's ability to target investment paths like Treasury inflation-protected securities and real-estate investment trusts - instead of just real-estate related securities as before - will preserve the purchasing power of investor portfolios over the long term.

The investment adviser for Wilmington's $218-million Real Asset Fund is Wilmington Trust subsidiary Rodney Square Management. Two of the nvestment sub-advisers, AEW Management and Real Estate Management Services Group Florida also sub-advised the predecessor fund. Those firms are joined by Standish Mellon Asset Management. The newly designed fund was originally launched on July 1, 2003 and maintains an institutional class and an investor class of shares. As part of the conversion, the annual expense ratio of the fund's investor class is expected to be lowered.

Wilmington Trust traces its roots to the private office of the industrialist DuPont family. It had about $40 billion in assets under management at the end of 2005. Besides its headquarters in Delaware, the trust company and its affiliates have offices in California, Florida, Georgia, Maryland, Nevada, New York, Pennsylvania, South Carolina and Vermont. Overseas it has offices in London, Dublin, the Cayman Islands and the Channel Islands. -FWR

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