At Securian Asset Management (Securian AM), we have a long history of managing real asset portfolios, specifically those focused on generating cash flow and distributing income to investors.
We believe that in a diversified liquid assets portfolio, the combination of underlying real assets with growing cash flows offers a compelling investment opportunity over long-term economic cycles.
A diversified real assets portfolio can achieve an investor’s objective of inflation protection with low relative volatility. And a combination of real assets with growing cash flows offers a compelling investment opportunity within the economic and business cycles. We find that the following distinguishing features make a diversified liquid real assets strategy an attractive choice for accessing the asset class:
Use of Real Estate Investment Trusts (REITs) — Potential anchor of a diversified liquid real assets strategy as a component to deliver growth and higher yield as well as liquidity.
Diversified, both in a total portfolio and within real assets — Low correlative investing through the use of diverse real asset classes, including Energy Infrastructure (or Midstream), Utilities, REITs, infrastructure and Treasury Inflation Protected Securities (TIPS) can result in consistent cash flow throughout market cycles. The intent is to deliver lower relative volatility than individual real assets alternatives and the overall U.S. equity market.
Transparent framework — The ability to rely on the use of exchange-traded securities across asset classes. This transparency allows investors to more easily assess valuations and other components of volatility and total return.
Use of Real Estate Investment Trusts (REITs)
REITs provide a more liquid way to invest in real assets, while retaining the potential for high-dividend income and high total return.
Though it may be common for some investors who are unfamiliar with publicly traded REITs to avoid them, REITs can provide relatively consistent total returns over market cycles. In fact, in 13 out of the last 19 years REITs have outperformed the S&P 500® Index.