Real assets like gold have been prime beneficiaries of the coronavirus pandemic as a safe haven amid the market uncertainty. Additionally, opportunities can arise for real assets in general and not just gold specifically.
Per a CrowdFund Insider report, “David Bouchoucha from BNP Paribas’ asset management division has argued that private debt and real assets could potentially offer good opportunities to investors during the COVID-19 outbreak.”
“Bouchoucha noted that these options can be attractive because private debt and real assets have proven to be resilient during times of economic uncertainty,” the report added further. “He explained that many investors, including pension funds, are interested in holding alternative assets so that they can diversify their portfolios and potentially generate more income.”
“You can expect a general repricing of risk as to the perception of risk changes, as you would in any crisis, which is good for investors as it can create attractive opportunities to enter the asset class,” Bouchoucha wrote.
Bouchoucha noted that private debt and real assets give investors the necessary diversification opportunities.
“[Private debt] is an asset class that involves investing in durable assets across economic cycles, in assets offering a liquidity premium and a risk premium over other (fixed income) assets, and in assets with predictable cash flows and thus offering a steady income,” Bouchoucha wrote further.
Rather than having to purchase real assets individually, investors can do so via one ETFs (ETFs), such as the FlexShares Real Assets Allocation Index Fund (ASET). ASET seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation IndexSM.
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.
Another way for investors to get real asset exposure is via real estate. One place to look is via real estate-focused ETFs like the FlexShares Global Quality Real Estate Index Fund (GQRE).
The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.
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