Real assets are tangible assets that have intrinsic value and are used for productive purposes. They are physical assets that have an inherent worth due to their substance and properties. Real assets differ from financial assets in that financial assets get their value from a contractual right and are typically intangible. Examples of real assets include:
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Real Estate: This includes commercial real estate, residential properties, and REITs (Real Estate Investment Trusts) .
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Natural Resources: This includes energy, oil & gas, timber, agriculture, solar, mining, and commodities.
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Infrastructure: This includes transportation (roads, airports, railroads), utilities, and telecommunications infrastructure.
Real assets are appealing to investors for several reasons, including high current income, inflation protection/equity appreciation, low correlation to equity markets, and favorable tax treatment. Real assets provide portfolio diversification, as they often move in opposite directions to financial assets like stocks or bonds. However, real assets tend to be more stable but less liquid than financial assets.
