Real assets are physical assets that have value due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land, machinery and oil. They are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial assets such as stocks and bonds.

BREAKING DOWN ‘Real Asset’

Real assets, such as real estate, infrastructure and sustainable resources, are particularly well-suited investments during inflationary times because of their tendency to outperform financial assets during such periods. In a 2017 report, asset management firm Brookfield cited a global value of real asset equities totaling $5.6 trillion, with 57% comprised of natural resources, compared to 23% in real estate and 20% in infrastructure.

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