What are Real Assets in Alternative Investments?
What is Real Assets?
Real assets are tangible investments with intrinsic values due to the nature of their physical properties. They are essential to the diversification of investment portfolios as they have a relatively low correlation with financial assets, and provide a more stable investment that also works as an inflation hedge.
Also, they often provide a predictable and steady income stream for investors. However, investors need to also take into consideration the illiquid nature of real assets and their higher carrying costs.
Current overview
2021 would be a year of recovery from Covid-19, and investors need to pay attention to the transition for the economy. As the society is shifting toward a "new normal", investors need to reevaluate their allocations of assets.
According to BlackRock’s 2020 Global Rebalancing Survey, 55% of investors surveyed indicated their intention to increase their Real Assets allocation in 2020, moving out of equities and cash and into alternatives.
Strategic allocation to pandemic-driven trends
As the lifestyles of people are being altered by the pandemic, society is shifting toward a more digitized world. Real assets investors need to take advantage of this growing trend and allocate their assets in related sectors to enhance resiliency.
Sectors such as data centers, green energy infrastructure, and industrial real estate are some examples that are currently favored by this trend.