Heading into this year our team decided to start investing more in real assets. I summarized our outlook here, but the main takeaway outside of additional inflation protection was:
Shifting a portion of your portfolio from bonds to real assets continues to be important. Real assets diversify a portfolio. They have higher return expectations than bonds, which helps your portfolio without adding stock market risk.2022 Investment Outlook
Thus far investors who made this shift have been rewarded as some real asset strategies are making money this year while stocks and bonds are down.
In this special episode of the Wealthy Behavior podcast we talk to Casey Frazier, Chief Investment Officer at Versus Capital, who oversees a team managing real asset portfolios. If you’ve ever wondered about investing in real assets – what they are and the investment case – this podcast episode is for you.
Investing in Real Assets Podcast
We start with a somewhat tighter definition of real assets than the industry – tangible or hard assets that have contractual cash flows. Think real estate, infrastructure, farmland and timberland.
Don’t think commodities, precious metals or TIPS which don’t meet that definition. Gold has a reputation as a good investment during high inflation environments because people expect others to buy it and push up the price. That’s not a reliable path to return. What is? Charging more rent as a landlord because of inflation.
Casey also explains farmland and infrastructure investments for those not familiar with them and the advantage of private real estate investing over publicly-traded REITs (hint: lower volatility).
We also discuss why the concerns with commercial real estate post COVID-19 are overstated. Commercial real estate is a broad category, and while there are areas that will struggle, there are also opportunities from assets repositioning.
Be sure to listen to the whole conversation, or read the transcript here as Casey and I also discuss:
- The commercial real estate areas he is concerned about and where the opportunities lie
- How you can invest in private real assets through mutual funds
- The driving forces for infrastructure returns and the market’s size
- How the Ukraine war impacts farmland
- When you will see material costs for your home improvement come down