Real Assets

A Supportive Macro Backdrop for Listed Real Assets

White Paper

Oct 17, 2022

2022 so far has been a rough year for markets. As the volatility likely persists from here amid further Federal Reserve tightening and above-average inflation, we believe listed real assets may be poised to potentially outperform—if history is any guide.1

Global equities and bonds both sold off sharply in the third quarter, after the Fed signaled it would maintain an aggressive pace of tightening in order to tame inflation, even if it triggers economic pain. As the Fed continues to battle inflation, the growth outlook is becoming increasingly uncertain. Recession risks are rising, but there remains a chance—albeit a declining one—that the Fed will be able to achieve a soft landing. What is certain, however, is that the Fed’s tightening cycle will continue, with interest rates remaining higher than they have been over the past 10 years. We also see inflation remaining above the Fed’s 2% target for the foreseeable future.

We believe an environment of Fed tightening and above-average inflation could be supportive of listed real assets. While rising interest rates are often viewed as negative for infrastructure and real estate, our research shows that this isn’t necessarily the case. We find that global infrastructure equities and real estate equities have historically outperformed the broad equity market in periods of Fed tightening—and listed real asset debt has performed better than broader fixed income. Similarly, we find listed real assets have historically outperformed global equities and bonds in periods of above-average inflation, and in periods with both above-average inflation and Fed hiking. Read more in the full Real Assets Quarterly.

1 Past performance does not guarantee/is not indicative of future results.

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Disclosure Information

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.