History shows that including real assets in a portfolio may provide inflation sensitivity, greater portfolio diversification, and attractive risk-adjusted returns over full market cycles.
Vince Childers, Head of Real Assets Multi-Strategy, discusses key challenges investors are facing today, why real assets are positioned to benefit, and Cohen & Steers’ strategic, long-term investment approach.
ABOUT THE AUTHORS
Vince Childers, CFA, Senior Vice President, is Head of Real Assets Multi-Strategy and a portfolio manager for Cohen & Steers’ real assets strategy.
FURTHER READING
Maintaining a strategic allocation to real assets
Senior Portfolio Specialist Michelle Butler spoke with Portfolio Adviser for a video interview about how a diversified real assets allocation may benefit investors in the new macroeconomic regime characterized by higher interest rates and inflation compared to the previous decade.
3 Reasons to own real assets today
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.
Capital Market Assumptions: Expectations for the next 10 years amid a generational change for markets
We expect higher fixed income and real asset returns alongside lower U.S. equity returns for the next decade.
Please see important disclosures and risks below.
The views and opinions are as of March 2022 and subject to change without notice and represent an assessment of the market environment at a specific point in time, should not be relied upon as legal, investment or tax advice and is not intended to predict or depict performance of any investment. We consider the information to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of appropriateness for investment. Investors should consult their own investment professional with respect to their individual circumstances.
Data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated above will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that a market forecast made in this commentary will be realized. Diversification does not assure a profit nor protect against loss.
Risks of Investing in Real Assets Securities.
A real assets strategy is subject to the risk that its asset allocations may not achieve the desired risk return characteristic, underperform other similar investment strategies or cause an investor to lose money. Risks of investing in REITs are similar to those associated with direct investments in real estate securities, including (i) property values may fall due to increasing vacancies, declining rents resulting from economic, legal, tax, political or technological developments, lack of liquidity, limited diversification and sensitivity to certain economic factors such as interest rate changes and market recessions. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities, including market risk, credit risk, counterparty risk, leverage risk and liquidity risk and can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. Securities of natural resource companies may be affected by events occurring in nature, inflationary pressures and international politics. Global infrastructure securities may be subject to regulation by various governmental authorities, such as rates charged to customers, operational or other mishaps, tariffs and changes in tax laws, regulatory policies and accounting standards. Foreign securities involve special risks, including currency fluctuation and lower liquidity.
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