We believe liquid real assets — including real estate securities, commodities, natural resource equities and listed infrastructure — offer an attractive way to enhance diversification, particularly as the market pivots away from quantitative easing and low interest rates to a policy-induced reflationary environment.
What’s real is real. Tangible real assets have been an increasing focus for investors looking to diversify beyond traditional equities and fixed income. However, there is often a misconception that private, illiquid investments are the only “real” way to allocate to real assets. Not only does this often leave smaller investors underallocated due to the challenges of implementing private-market strategies, but even larger investors often struggle to implement a well-diversified real assets program and therefore miss out on some of the most compelling characteristics of the asset class.
Ease of access. Listed markets can reduce barriers to access so significantly that investors of any size can establish a br oadly diversified real assets allocation — diversified globally and by real asset category. Diversifying in this way may help to balance the inherent tradeoffs of individual real asset categories and has historically offered attractive full-cycle returns, diversifying performance patterns and positive sensitivity to unexpected inflation.
Benefits of the blend. Individually, each of the above attributes has merit, but together they can offer tremendous utility to investors that are concentrated in traditional equities and fixed income, helping to maintain or potentially enhance portfolio returns while reducing risk.
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