Andy Wilson, Product Specialist, DWS, joined Julie Cooling, Founder & CEO, RIA Channel to discuss the key benefits of allocating to a diversified real assets portfolio.
“A decade of declining interest rates and easy monetary policy has paved the way for stellar equity performance, with relatively minimal volatility,” explains Wilson. Looking forward, the real assets sector is likely to benefit from raising interest rates and a tightening monetary policy, making it an attractive asset class for advisors, especially those looking to gain private markets exposure.
Due to the current environment, DWS projects that equities will deliver a more muted return stream in the future. Real Assets can be leveraged to offer enhanced return as well as portfolio diversification. Real assets are assets that have an inherent physical worth, like global infrastructure, global real estate, and commodities.
Real assets historically provide investors with solid returns and a hedge against inflation. This asset class has performed well in 2021 so far, despite economic challenges that other asset classes have faced. In addition to being relatively cheap, real assets have been generating higher yields than equities and bonds, and they offer valuable diversification potential to mitigate risk.
DWS offers the DWS RREEF Real Assets Fund (AAAZX), which combines assets in real estate, infrastructure, and commodities into one streamlined solution to implement real assets into a portfolio. Using diversification to lower drawdown and volatility, the objective of investing in a multi-asset real asset strategy is to try to get the benefits of each of the underlying asset classes. Additionally, top-down and bottom-up processes have each contributed to the alpha generation of the portfolio.
DWS investments is a trillion dollar global asset manager, headquartered in Frankfurt, Germany, and with offices in Europe, Asia, and the United States. DWS serves both retail and institutional clients, and has three main product offerings. These offerings are active investments, including equities, fixed income, and multi-asset mutual fund strategies, passive investments, including ETFs and ETCs, and alternative investment funds, including private equity, real estate, and infrastructure investments.
To learn more: Private Market Playbook: Real Assets August 25th | 4 CE credits