Ken Shepard, managing director and head of specialty asset management at Bank of America Private Bank, explains.
Which real assets are re-emerging as long-term portfolio diversifiers?
As long-term real assets investors, we target high-quality assets at attractive valuations and expect to hold them over extended periods. We, therefore, tend to look through short-term volatility while closely tracking key value drivers, particularly interest rates and sector fundamentals. With three distinct asset classes (commercial real estate, farmland and timberland) each influenced by its own cycles, drivers and acquisition dynamics, one can assess relative value and correlations when building a diversified portfolio across one or more of these sectors.
Importantly, farmland and timberland can be powerful long-term diversifiers in a portfolio, given their relatively low to moderate correlation with traditional financial assets, inflation-hedging characteristi
