Real Assets

Real Asset Equities Still Have Room to Recover

White Paper

Apr 16, 2021

Real Assets Quarterly: Real Asset Equities Still Have Room to Recover

Real asset and broad equities were rising together before the COVID-19 pandemic and related shutdowns shocked the market last year. Yet while the broad market has more than fully recovered since, real asset equities still have room to recover. We see this dislocation as an opportunity that may be short-lived as reopening gains steam.

The MSCI World Index is now roughly 15% above its pre-pandemic peak on February 12, 2020, back in line with its long-term growth trend, as the vaccine rollout, strong earnings and fiscal stimulus have helped boost optimism about the economic growth outlook and fueled momentum for growth names. Infrastructure and real estate equities are still trading below their February 2020 peak, underperforming broader equities. This lag represents a break from the more lockstep movement with the broader market before last February.

We see signs that real asset equities are likely to recover and further close the gap in coming months. We believe the worst is behind us and a full reopening—and subsequent economic rebound—is on the horizon, with the timing of a full recovery dependent on the speed and effectiveness of the vaccine rollout. In our view, this outlook is still not fully reflected in real asset equity valuations—though we expect it soon will be. Markets may soon recognize what we see: a strong cash-flow recovery among real asset sectors that have been in the crosshairs of economic shutdowns and social distancing, and sustained demand ahead appears more likely amid the vaccine rollout. Bottom line: Real asset equities offer a valuation opportunity to consider now, before it’s gone. Read more on our outlook and views in the full piece.

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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.