In times of inflation, it helps to add real assets, and exchange traded fund (ETF) investors can do this all with one fund: the FlexShares Real Assets Allocation Index Fund (ASET).
A study by global investment firm BlackRock showed that real assets can outperform stocks and bonds in an inflationary environment. With consumer prices on the move as of late, it’s a prime time to consider ASET.
“Investors worried about keeping up with the rising cost of living may want to consider exposure to real estate and infrastructure assets, which historically have outperformed in an inflationary environment, a BlackRock report shows,” a MarketWatch article said.
“The asset management giant looked at average annual returns in different regimes of growth and inflation over the past 20 years, finding that U.S. and global real estate, as well as global infrastructure, beat stocks and bonds when inflation is high. Outperformance was seen in low and high periods of growth, the report shows,” the article added.
Removing the Guesswork
As far as what real assets to hold, ASET removes all the guesswork — as opposed to holding multiple assets like precious metals or commodities like oil, 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 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.
As of September 13, the top three sector allocations include materials, real estate, and industrials. Moreover, ASET takes a global approach by investing in countries outside of the United States as well, including Canada, the United Kingdom, and Japan.
“BlackRock expects inflation will rise over the medium term to above the Federal Reserve’s average target of 2%, following record levels of monetary and fiscal stimulus supporting the economic reopening in the pandemic, according to the report,” the MarketWatch report said.
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