What are Real Assets and why invest in them?

What are Real Assets?

• A real asset is a tangible asset like gold, oil, and real estate.
• It has intrinsic value due to its utility.
• Its value is derived by virtue of what it represents.

Why invest in Real Assets?

• Real Assets have low correlations to traditional stocks and bonds.
  • Because commodities have low correlations to stocks and bonds, they can be a good choice to lower your overall portfolio risk while enhancing your potential for better long-term risk-adjusted returns.
• Hedge against inflation.
  • Inflation is the increase in the amount of currency required to purchase goods and services. Commodities can help protect investment portfolios against inflation because they represent the value of goods and services, not the value of currency. According to the U.S. Bureau of Labor Statistics, inflation has reduced Americans' purchasing power every year but two dating back to 1945.
  • The most commonly referenced measure of inflation is the Consumer Price Index (CPI). The CPI is based on a monthly survey by the U.S. Bureau of Labor Statistics and it compares changes in the prices paid by consumers for a representative basket of goods and services. The monthly CPI reading is widely considered a useful way to measure prices over time.
  • When it comes to investing - whether for income or for growth - you can't afford to ignore the eroding effect inflation can have on the value of your assets.

*Source: The Handbook of Inflation Hedging Investments

• Provide diversification.
  • Real Assets are a unique class that can provide valuable diversification benefits to an investment portfolio.
  • Used in combination with traditional assets like stocks and bonds, they can potentially reduce overall portfolio long-term risk while increasing upside potential.