Investor approaches to employing real assets within their portfolio will vary. Whether looking to invest in individual asset classes or a multi-strategy blend, portfolio specialist
Michelle Butler explains the three key historical benefits of a strategic allocation to real assets: outperformance during inflationary periods, diversification potential and attractive total returns.
ABOUT THE AUTHORS
Michelle Butler, Senior Vice President, is a Real Assets Portfolio Specialist for Cohen & Steers, specializing in Global Listed Infrastructure, Midstream Energy, and Commodities.
FURTHER READING
3 Reasons to own real assets
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.
Secular drivers of inflation
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
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.
