Real assets can provide an alternative source of income as well as portfolio diversification, which is necessary amid the volatility that investors have been experiencing as of late in the equities market.
In a world of rising global inflation, getting more yield has proven to be a challenge. That said, this is where real assets can help shore up a portfolio with an additional income source.
“For advisors under pressure to find new, stable sources of income for their clients in the context of weak bond yields and high inflation, private real assets could prove a useful addition to a portfolio,” a Barron’s article notes.
“Though sometimes overlooked as a source of current income, private real assets funds provide differentiated exposure to real estate, infrastructure, and natural resource assets, many of which provide regular cash yield,” the article adds. “In addition, they may offer higher total returns than traditional fixed income, help to hedge against inflation, and provide diversification benefits.”
Getting Real Asset Exposure in 1 ETF
Rather than hold multiple assets like precious metals or commodities like oil, the FlexShares Real Assets Allocation Index Fund (ASET) can give investors exposure to it all through one position. Additionally, volatility is minimized due to ASET holding companies that represent real asset exposure versus the actual tangible assets themselves.
ASET seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation Index. The underlying index measures the performance of an optimized allocation to the underlying funds that is intended to provide exposures to certain real assets and minimize the overall volatility of an investment in the underlying funds.
As of February 28, the top three sector allocations are real estate, industrials, and utilities. Moreover, ASET takes a global approach by investing in countries outside of the United States as well, including Canada, the United Kingdom, and Japan.
The fund also comes with a quarterly distribution. As of February 28, the distribution yield is 4.31% and the SEC subsidized yield is 2.71%.
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