You've probably heard the rule of thumb: younger investors should focus on stocks to grow their savings, while those nearing retirement should tilt towards bonds for the regular income they pay. Go all in, basically, when you've got lots of time, and fasten your seatbelt as you approach your destination.
But there's another way for investors who are somewhere in the middle. And there's another type of investment—real assets—that can generate income and inject diversification into a portfolio that balances growth and safety.
A TOLL BRIDGE OVER TROUBLED WATER
Real assets. This asset class gets its name from the fact that it's made up of tangible, physical things. Airports, toll roads, wind farms: things you can see and touch.
Real assets have intrinsic value and generate predicable income.
Those qualities matter—since they allow balanced investors to get the growth they expect from stocks and the safety they need from bonds, but in a way that tends to be more predictable than either of those traditional asset classes.
High inflation can wreak havoc on bond yields, for example. Just as inflation can lead to sliding stock prices. But those same economic conditions don't keep commuters away from toll roads or travelers away from airports. And those joint qualities (intrinsic value; predictable income) can help real assets appreciate over time.
Here are some other examples:
- Residential and commercial real estate
- Infrastructure (bridges, ports, pipelines, and utilities)
- Agriculture, timber, and natural resources
- Renewable energy (solar and wind farms, geothermal and hydroelectric plants)
INSTITUTIONAL-STYLE INVESTMENTS FOR RETAIL INVESTORS
Institutional investors have been buying real assets (office towers, for one) for many years. But as investments go, office towers aren't exactly easy to buy and sell. The fact that real assets are frequently illiquid has put these investments beyond the reach of retail investors until recently. Today, clients of Lawyers Financial's private wealth program can gain exclusive access to the asset class as part of a discretionary portfolio managed by Montreal's Fiera Capital.
Diversify your portfolio—and your sources of expertise. We take a team-based approach to serving your overall financial needs. Book a 20-minute meeting with a certified financial planner. They'll ask about your needs, goals, and tolerance for risk, and can arrange for a private wealth consultant from Fiera Capital to join your team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.