- December 1, 2014: Vol. 1, Number 3

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Optimizing a PE Real Assets Program

by Jennifer Garrison

A private equity investment program in real assets can help investors diversify their portfolios, generate yield, provide inflation protection and offer the opportunity to earn above-average returns. But investing in real assets is a significant undertaking. Many investors lack the resources to identify the most attractive opportunities, adequately conduct due diligence and manage complex portfolios.

To meet their investment objectives, investors must construct and manage high-quality portfolios, yet the risk of picking bad investments is significant. According to The Burgiss Group LLC, the median net return for private real estate and natural resources funds from 1987 to 2010 was a low 5.6 percent and 7.7 percent, respectively (as of Dec. 31, 2013). Investors must find managers who can consistently perform above the median simply to justify an investment in the asset class.

Real assets investing is not just about putting capital to work; it is about finding the most a

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