Real Assets

Why to Look Outside the U.S. for Opportunities

Article

Sep 15, 2021

Looking for opportunities in listed real assets? We believe non-U.S. listed real assets generally offer more value today than U.S. counterparts.

A stronger vaccination rollout helped the U.S. economy—and U.S. equities—recover earlier than other regions from the pandemic-related downturn. Now, as more of the world’s population has received COVID-19 vaccinations and some signs of normalcy have returned, other economies globally are recovering as well. However, we find that stock prices in many of these countries have yet to fully reflect local recoveries.

The chart below shows both the equity returns for major developed and emerging markets between the April 2020 broad-market trough and today (the blue bars), as well as the latest Purchasing Managers' Index (PMI) data for each country (the orange dots).

Returns outside the US trail economic recoveries

While PMIs for many countries—particularly in Europe—have recovered to levels well over the above-50 expansion territory, in line with recent U.S. data, stocks in these countries are still lagging U.S. equities and appear undervalued vs. recovering economic data. In our view, this delayed reaction to recovering data gives non-U.S. markets in Europe and elsewhere a longer runway for outperformance from here.

Against this backdrop, we believe the most attractively valued investing opportunities in listed infrastructure and real estate can be found outside the U.S. In infrastructure, we see opportunity within European utilities, which are trading at favorable valuations vs. their U.S. peers. Airports also continue to be a global opportunity, given that air activity has, as expected, not recovered as quickly as road travel. We like Mexican airports, in particular, which are trading at attractive relative valuations.

In real estate, we favor exposures in Europe vs. other regions, and see select opportunities in European hotels, retail and office. Overall, we believe a concentrated active approach based on fundamental research can uncover the most attractive opportunities across global markets, given that market dynamics can shift rapidly. Read more on our views on real assets by downloading 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.