Real Assets

As central banks worldwide step up quantitative easing and effectively debase fiat currencies, many investors are today looking to hedge their portfolios against the risks of inflation.

In conjunction, the growing pervasiveness of negative interest rates across the fixed income universe has forced institutional investors such as pensions to explore alternative categories that can generate higher income streams at better yields.

These twin dynamics underscore the importance of real assets being a crucial component of every credible investment portfolio today. By delivering income, offering protection against inflation, and ensuring diversification beyond equities and bonds, this category merits consideration in the playbook of every yield-seeking investor in a yield-hungry world.

Unlike financial assets like equities and fixed income that derive their value from a contractual right, real assets’ worth is based on the intrinsic value of the underling physical assets.

Three major types of real assets

  • Real Estate

    Include real estate investment trusts (REITs), land, commercial properties including offices, malls and warehouses

  • Infrastructure

    Assets and networks underpinning transportation, storage and distribution, such as airports, pipelines, toll roads, cellphone towers, etc.

  • Commodities

    Precious metals such as gold and silver, as well as basic goods like oil, natural gas, corn and soybeans

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