What are the implications of the recent extraordinary global macroeconomic changes for real asset investing in Europe?

Within less than 12 months, between January and November of last year, the recent era of ultra- low — and in some markets, negative — interest rates unwound spectacularly fast, as surging inflation forced central banks worldwide into a precipitous reversal of 15 years of loose monetary policy.

For real asset investors, the golden era of ultra-low interest rates unwound faster than anyone expected. The relative-value argument of real assets compared with equities and bonds loses salience in a protracted higher interest rate environment. “The fast rise of interest rates dealt a heavy blow to classic allocated institutional investors as fixed income became quite a toxic asset class,” says Markus Königstein, global head of investment management at Empira Group.

Initially, the denominator impact caused real asset allocations to increase in multi–asset class portfolios, as repricing in fixed income and equities was swifter relative to real estate, which pushed som