Opportunities in private real assets

Sources: Bloomberg, National Council of Real Estate Investment Fiduciaries (NCREIF), and Wells Fargo Investment Institute, as of June 30, 2021. For illustrative purposes only. NCREIF Property Index is a composite total return for private commercial real estate properties held for investment purposes only. NCREIF Farmland Index is a composite return measure of investment performance of a large pool of individual farmland properties acquired in the private market for investment purposes only. NCREIF Timberland Index is a composite return measure of investment performance of a large pool of individual timber properties acquired in the private market for investment purposes only. NAREIT All Equity REIT Index is considered representative of the equity REIT market. S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. Index returns do not represent investment performance or the results of actual trading. Index returns reflect general market results, assume the reinvestment of dividends and other distributions, and do not reflect deduction for fees, expenses or taxes applicable to an actual investment. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.

Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. Private real assets are not appropriate for all investors. REITS have special risks, including the possible illiquidity of the underlying properties, credit risk, interest rate fluctuations, and the impact of varied economic conditions. Farmland REITS are subject to many of the risks associated with direct real estate ownership including adverse economic conditions which may negatively affect property values, returns and profitability. Timberland investments are subject to acts of nature, political and environmental pressures, decreased consumer demand in addition to the risks associated with short-term price volatility, interest rate fluctuations and lack of liquidity.

Key Takeaways

  • Private real assets have performed well over a full market cycle, offering diversification through non-correlated return streams.
  • Private Real Estate (a sub-strategy of private real assets) features various strategies with differing risk-return profiles. At this point in the cycle, we are more constructive on value-add and opportunistic strategies.