There’s a greater willingness of multi-asset managers to incorporate non-traditional asset classes within their strategic asset allocation, according to a report from Zenith Investment Partners.
Their report Multi-Asset – Diversified sector report looked at the growing trend and found while real assets were a good addition to a diversified portfolio, they still had their own risks.
Previously, this included unlisted assets such as private equity and debt, but more recently real assets had been added to the mix due to the belief they had unique characteristics which helped improve portfolio efficiency.
Andrew Yap, Head of Multi-Asset and Australian Fixed Income at Zenith, said real assets are attractive to managers for a number of reasons, including generating a strong, stable cash flow linked to inflation.
“Additionally, their earnings tend to be less cyclical than shares, offering some protection when equity markets sell-off,” Yap said
“That said, an assessment of Real Assets requires a specialist skill set in recognition of their structural complexity and intensive nature of physical asset management.”
The report had also found none of the 312 products in the sector had a “highly recommended” rating from Zenith, while 71 were rated “recommended”, and 216 “non-rated”.