Real Asset Investment in Today’s Market

Real Asset Investment in Today’s Market

There has been a significant change in market environment since the start of the year which has been testing the robustness of investment portfolios. The key risks investors face are inflation and broader market uncertainty and in this uncertain environment, new opportunities in the Real Assets space have started to come into the limelight as they can offer diversification benefits, strong ESG credentials and also inflation-linked revenues.

We have produced a paper focused on the current Real Asset investment opportunities in today’s market environment which covers:

• How we expect holdings in traditional UK commercial balanced property and long lease property to fair in the current market environment
• The impact on real asset valuations in this high inflationary and rising interest rate environment, we highlight the impact over the short term and long term
• The areas of the Real Assets markets which we think provide the most attractive opportunities

The market environment is ever changing, and given the recent volatility in LDI markets, the general approach from pensions schemes is to take a greater focus on overall liquidity of their portfolio.

While Real Assets is considered to be on the less liquid end of the spectrum of investments, the approaches we favour in the market have an open-ended structure and so provide a level of liquidity not privy to Real Asset holdings in the past, we therefore still believe these new areas can have a place in today’s portfolios.