EC Mythbusting: Combatting The Top Myths In Real Asset Investing

The COVID-19 pandemic has impacted the global economy and financial markets in a myriad of ways over the past year, and real assets - including real estate and infrastructure - have been no stranger to the turmoil.

Global restrictions on travel along with stay-at-home directives have seen reduced demand for infrastructure assets, such as airports and toll roads. Tack on the massive pivot from offices to a work-from-home environment, and it’s not surprising that some investors are questioning the value of real asset strategies in their portfolios.

In light of these negative connotations, we aim to set the record straight by separating facts from fiction when it comes to investing in real assets today. After all, myths deal with beliefs, not facts. With that in mind, we’re here to bust the most popular real asset investment myths of the past year. Let’s get started.

Myth 1: Isn’t Real Estate Just Offices, Retail, and Hotels?

While investors may think that commercial real estate is mainly comprised of offices, shopping malls, and hotels, the fact is that over the last decade there has been significant growth and evolution of the investable opportunities set across real estate. For example, in 2010, e-commerce related sectors (which include cell towers, data centers, and industrials) accounted for 9% of the industry market capitalization.

By contrast, in 2019, these same sectors accounted for 32% of market capitalization.The significant growth in these non-traditional real estate sectors illustrates how investors in real estate can access more diversified and less cyclical investment opportunities that are an integral part of the 21st-century real estate ecosystem.

Myth 2: Isn’t Infrastructure Dead if No One’s Flying?

It stands to reason that airport investors would be concerned about the impact on air travel and passenger volumes, considering the lockdowns and travel restrictions surrounding the COVID-19 pandemic. That said, we believe airports remain an attractive long-term investment proposition, given the significant growth in air travel globally over the last several decades.

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Disclaimer: Opinions expressed by readers don’t necessarily represent Russell’s views. Links to external web sites may contain information concerning investments other than those offered ...

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