3 Reasons to own real assets

3 Reasons to own real assets

4 minute read

March 2024


Sign up to get our insights

A diversified blend of real assets can potentially play a vital role in the new regime of higher inflation, higher rates and increased market volatility.

Given the desynchronized payoffs of global real estate, listed infrastructure, natural resource equities and commodities, combining an array of real asset categories within a diversified framework has historically delivered competitive returns with significantly less volatility than global stocks.

Annualized nominal returns and standard deviation

May 1991-December 2023

Annualized nominal returns and standard deviation

Despite inflation trending lower, ample catalysts for a resurgence in inflation warrant a permanent allocation in real assets, including resilient economies, tight labor markets, fiscal uncertainty, geopolitical tensions and commodity market imbalances. Real assets’ sensitivity (or beta) to the broad global equity market may help to reduce portfolio volatility and improve risk-adjusted returns.

Unexpected inflation and Beta to Global Equities

All core real asset classes appear either neutrally or attractively valued to us, with listed infrastructure and natural resource equities the most attractive. In contrast, valuations for the broad global equities market appear to be relatively unattractive.

Private infrastructure dry powder, $ billions(3)


Secular drivers of inflation

Secular drivers of inflation

January 2024 | 4 mins

Recent data indicates a slowing inflation trend, yet risks persist. Secular forces suggest that a prolonged elevated inflation period is underway with the potential for periodic price spikes. Factors driving long-term inflation include commodity underinvestment, tight labor markets, geopolitics, deglobalization and fiscal uncertainty. We see parallels to past inflationary eras, which highlight the difficulty of controlling inflation. While not predicting a return to 9%, the expectation is for a decade of higher-than-accustomed inflation, underscoring the importance of having a real assets allocation.

Opportunities in the era of scarcity

December 2023 | 25 mins

The world is transitioning from an era of commodity abundance to one of undersupply. We believe this shift may result in significant returns for commodities and resource producers over the next decade.

The Israel–Hamas war and the implications for real assets

The Israel–Hamas war and the implications for real assets

October 2023 | 7 mins

Cohen & Steers is closely monitoring developments in the Middle East following the horrific terrorist attack on Israel. We offer a concise examination of the potential impact on real assets and the macroeconomic environment.