Real Assets - Asset Class Views

Pardon the Interruption

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The COVID-19 pandemic and market turbulence has turned the property sector on its head – while residential property heated up with stamp duty relief, commercial property suffered from sustained uncertainty, which was not helped by prominent fund closures and social distancing restrictions.

At the same time, disruptions to global supply chains and travel and the rise of digitalisation are diminishing formerly stable revenue streams and shifting infrastructure demand in totally new directions. Investors also face rising market uncertainty driven by geopolitical tensions and higher inflation. 
For the past four months, pension professionals in the UK have been consistently enthusiastic about infrastructure, though they remain bearish about property. What is more, trustees must consider a number of things before investing; for example, while both infrastructure and property are accessible to most DB and DC pension funds, DC schemes are less inclined to invest in infrastructure, because of concerns about the liquidity profile of real asset funds as well as the extra costs. ESG is a further factor; over a third say there is a lack of standardised ESG reporting available for real assets.
Given the increased uncertainty in the market, it will be important to monitor new developments and areas of opportunity in real assets. 

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