This Is The Proof You Need Real Assets In Your Portfolio
If there is any doubt that real assets are an important part of today’s investment portfolios let me put them to rest. They are, and there is proof I am not alone in that opinion. Data from BlackRock shows capital inflows to real assets have been rising on a global level as fund managers increase their allocations and investors flock to the sector.
Investors are flooding into the real assets space for a number of reasons that include steady returns and protection from inflation. In today’s environment volatility is high and inflation is on the rise.
Real assets are a unique asset class in that most of the businesses are protected by law or other barriers to entry, and their businesses are often linked to inflation. These qualities have proven over time to deliver better return with lower risk than both traditional stocks and bonds in all market conditions.
Brookfield Asset Management is a century old asset-manger focused on real assets including natural resources, real estate, infrastructure, and real assets equities. The company has just released its calendar third-quarter earnings report and the results are good, driven by the rising tide of real assets investment. The company reports FFO, funds from operations, otherwise known as fee-based revenue, are $1.1 billion or $1.07 per share, up more than 35% from last year and 67% better than the consensus estimate.
Brookfield reported total revenue for the quarter is $14.68 billion, up 21.06% from the year-ago period, and driven by growth in both private and publicly listed funds. In the letter to shareholders, Brookfield says global inflows to alternative investments and real assets continues to grow. The company reports robust growth in all categories that totals more than $18.5 billion in the year-to-date period.
“Global capital flowing into alternative assets continues to grow. Our strategies and funds are seeing robust inflows, including flows of $12 billion to date into our next opportunistic real estate fund, $6.5 billion into the first close of our private equity fund, and the initial launch of our next infrastructure fund.”
The company also reported $32 billion of liquidity it would reinvest in its flagship funds, real estate, infrastructure, and private equity, in order to deliver future growth to shareholders. Along with this, the board of directors approved a dividend of $0.15 per share, in line with previous distribution.
Among the many services offered by Brookfield, the company manages a number of publicly listed securities self-directed investors can take advantage of. These include mutual funds, closed-end funds, and UCITS funds which are the European equivalent of a mutual fund. The funds are arrayed across real estate, infrastructure, real assets equities and the securities issued by real assets companies.
Brookfield trades on the New York Stock Exchange under the ticker BAM. The stock yields a dividend that annualizes to 1.45% with shares trading near $44. The payout ratio is a low 22% which means there is plenty of room should earnings wane. Considering the amount of growth, and expected growth, in the real assets sector it is more likely earnings for Brookfield will continue to grow.