Real Assets

Real assets are physical assets that have value due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land, machinery and oil. They are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial assets such as stocks and bonds.

In the investing world, real assets are an asset class generally for investors who are particularly concerned about inflation, currency prices or other macroeconomic factors. These real assets might include gold, oil or real estate, for example.

Real assets, such as real estate, infrastructure and sustainable resources, are particularly well-suited investments during inflationary times because of their tendency to outperform financial assets during such periods. Real assets are not financial assets, which get their value from a claim on other assets. Real assets, rather, derive their value from their own essential and inherent qualities. They can be very useful in hedging a portfolio, but they also require storage space and even maintenance. This can increase the cost of buying and selling them.

Inflation, shifts in currency values and other macroeconomic factors affect real assets less than financial assets. Real assets are a separate and distinct asset class from financial assets. They tend to be more stable than financial assets.

Further, cash-flow from real assets like real estate and infrastructure can provide predictable and steady income streams for investors.    Real assets, however, have lower liquidity than financial assets, as they take longer to sell and have higher transaction fees in general. Finally, real assets have higher carrying and storage costs than financial assets.

Real assets are physical assets that have value due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land, machinery and oil. They are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial assets such as stocks and bonds.

In the investing world, real assets are an asset class generally for investors who are particularly concerned about inflation, currency prices or other macroeconomic factors. These real assets might include gold, oil or real estate, for example.

Real assets, such as real estate, infrastructure and sustainable resources, are particularly well-suited investments during inflationary times because of their tendency to outperform financial assets during such periods. Real assets are not financial assets, which get their value from a claim on other assets. Real assets, rather, derive their value from their own essential and inherent qualities. They can be very useful in hedging a portfolio, but they also require storage space and even maintenance. This can increase the cost of buying and selling them.

Inflation, shifts in currency values and other macroeconomic factors affect real assets less than financial assets. Real assets are a separate and distinct asset class from financial assets. They tend to be more stable than financial assets.

Further, cash-flow from real assets like real estate and infrastructure can provide predictable and steady income streams for investors.    Real assets, however, have lower liquidity than financial assets, as they take longer to sell and have higher transaction fees in general. Finally, real assets have higher carrying and storage costs than financial assets.