Real Assets
Positioning for Defensive Growth
White Paper
Jul 19, 2022
Markets have been volatile this year amid rising recession fears. While we can’t predict exactly when and if a recession will occur, our base case is that a short and shallow recession is likely. We believe inflation has probably peaked but will remain above the Federal Reserve’s 2% target for the foreseeable future, and we see interest rates remaining higher than they have been over the past 10 years.
Against this backdrop, we believe real asset investors should position for defensive growth. Real asset debt is becoming increasingly attractive amid rising rates, and we advocate increasing exposure accordingly.
However, if the next recession is indeed short and shallow, investors will also not want to completely abandon cyclical exposures. Fully de-risking likely means missing out on a subsequent recovery. Instead, we advocate going defensive in real asset equities via certain sectors supported by long-term structural tailwinds (such as underinvestment) and likely to offer relatively safe earnings. Read more in the full white paper.
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This material is not, and is not intended as investment advice, an indication of trading intent or holdings or the prediction of investment performance. All information is current as of the date of this material. Views and information expressed herein are subject to change at any time. Brookfield Public Securities Group LLC disclaims any responsibility to update such views and/or information. This information is deemed to be from reliable sources however, Brookfield Public Securities Group LLC does not warrant its completeness or accuracy. This presentation is not intended to, and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, product, investment advice or service (nor shall any security, product, investment advice or service be offered or sold) in any jurisdiction in which Brookfield Public Securities Group LLC is not licensed to conduct business, and/or an offer, solicitation, purchase or sale would be unavailable or unlawful. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.