A diversified portfolio should include assets that zig when the market zags. As equities market start to stumble, investors can take a look at exchange traded funds that track real assets to help prop up investment portfolios.
For instance, real estate investment trusts and infrastructure master limited partnerships are some alternative assets that can help diminish portfolio volatility, writes Jeff Benjamin for InvestmentNews. [Rate-Sensitive REIT ETFs Rebound]
These types of investments are not about providing outuperformance and growth. Instead, the alternative assets allow investors to gain exposure to investments that have low correlations to traditional assets like stocks and bonds.
So far this year, real assets have helped bolster portfolio returns as equities languished. For example, the Vanguard REIT ETF (NYSEArca: VNQ) has gained 2.4% over the past month and 11.6% year-to-date, and the JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ) is up 2.8% over the past month and 3.7% year-to-date. In comparison, the S&P 500 index has dipped 0.2% over the last month and is only up 1.9% so far this year.
VNQ and AMJ also show attractive 12-month yields of 2.88% and 4.82%, respectively.
“The main thing about real assets is your getting the diversification of lower correlation to traditional assets, but you’re also typically getting some inflation protection,” James Cunnane, chief investment officer at Advisory Research Investment Management, said in the article.