Real Asset Investments

Real assets are physical assets that have intrinsic value due to their substance and properties.

They are suitable for inclusion in diversified portfolios because their correlation with liquid financials such as stocks and bonds is relatively low.

Introduction

In an increasingly uncertain and volatile financial world, real asset investments have established themselves as an important investment segment. Unlike traditional financial assets such as stocks and bonds, real assets are characterized by their physical substance and long-term stability. This article provides an overview of the different types of real assets, in particular real estate, renewable energies, infrastructure, private equity and private debt, and highlights the benefits that investors hope to gain from these investments.

Stability and value appreciation potential

Real estate is probably the best-known real asset and plays a central role in the portfolio of many investors. As investment properties, they offer both stable cash flows through rental income and the opportunity for long-term value appreciation. Residential properties in urban areas as well as commercial properties that offer long-term contracts with tenants are particularly in demand. Inflation plays an important role here: rental income and property values often rise in line with the inflation rate, making real estate an inflation-protected form of investment.

Advantages of real estate as a real asset:

• Stable income: Regular rental income provides stable cash flow.
• Potential for appreciation: Real estate values often rise over the long term, allowing investors to grow additional capital.
• Inflation protection: Rental prices and property values can adjust to inflation.

You can find relevant articles on professional investment in real estate on ASSETPHYSICS in the Real Estate category.

Sustainable real asset investments with future potential

Renewable energies such as solar, wind and hydropower plants are becoming increasingly important as the energy transition is being driven forward in many countries. Investing in this area is not only environmentally friendly, but also offers stable returns in the long term. Renewables are often supported by long-term government subsidies, which stabilizes cash flow and increases investment security.

Advantages of renewable energies as a real asset:

• Sustainability: Investments in green energy contribute to environmental protection and are highly regarded by society.
• Stable cash flows: Long-term contracts often guarantee a secure source of income.
• Future market: The demand for green energy is growing and could continue to rise in the future.

Relevant articles on professional investment in renewable energies can be found on ASSETPHYSICS in the category Energy.

Essential real assets with stable revenues

Infrastructure investments include roads, bridges, airports, telecommunications and utility networks. Since infrastructure is essential for a country’s economic stability and growth, these assets are considered particularly safe and offer predictable returns over long periods of time. Infrastructure projects are often backed by public-private partnerships (PPPs), which reduces risk for private investors while allowing for more stable revenues.

Advantages of infrastructure as a real asset:

• Long-term stability: Infrastructure projects have long maturities and offer stabilized cash flows.
• Crisis security: Basic infrastructure is particularly in demand in times of crisis and often remains profitable regardless of economic fluctuations.
• Plannable returns: Many infrastructure projects are protected from price and revenue losses through government participation and regulations.

Relevant articles on professional investment in infrastructure projects can be found on ASSETPHYSICS in the Infrastructure category.

Promising real asset investment in non-listed companies

Private equity refers to the investment in privately held companies that are not listed on the stock exchange. In contrast to public markets, private equity gives investors access to companies with high growth and value appreciation potential. Small and medium-sized companies and start-ups that pursue innovative ideas are particularly attractive. Although private equity involves risks, it offers significant return opportunities if successful.

Advantages of private equity as a real asset:

• High return opportunities: Successful early-stage companies often offer strong growth opportunities.
• Diversification: Private equity provides access to special, non-public markets.
• Value creation through participation: Investors can actively contribute to the company’s development and thus increase the value of the company.

You can find relevant articles on professional investment in private equity on ASSETPHYSICS in the category Private Equity.

Attractive income opportunities through real estate financing

Private real estate debt includes the granting of privately financed loans, for example for real estate development or renovation, which takes place away from traditional banks. This form of financing is particularly attractive for real estate developers who are looking for more flexible conditions and shorter processing times than with conventional bank loans. For investors, private real estate debt offers stable and attractive interest income, as these loans are usually secured by the property itself. In times of low interest rates, this form of investment gains additional popularity, as it often offers a higher return than traditional bonds and at the same time is secured by the physical security of the property.

Advantages of private real estate debt as a real asset:

• Stable interest income: Secured real estate loans offer investors attractive and regular income.
• Security through real estate collateral: The property itself serves as collateral, which reduces the risk for the investor.
• Flexibility and diversification: This form of investment allows access to specific real estate projects and different markets.

Private debt is an interesting way for investors to benefit from the real estate market without becoming a direct owner, and thus offers attractive earnings opportunities with a comparatively high level of protection. You can find relevant articles on professional investment in private debt on ASSETPHYSICS in the category Private Debt.

Real assets as a stable and diverse investment option

Real assets offer a wide range of opportunities for investors who want to stabilize their portfolio and protect themselves from inflation. Real estate, renewable energy, infrastructure, private equity and private debt each offer unique advantages and contribute to the diversification of the portfolio. Especially in economically uncertain times, these physical assets are an important second pillar for investors in addition to liquid capital investment in securities, which enables long-term value creation and stable income.

Specific risk management

Investments in real assets such as real estate, renewable energies, infrastructure, private equity and private real estate debt offer attractive return opportunities and stabilising effects for the portfolio. But it is precisely the specific risks associated with these physical assets – from market fluctuations and liquidity risks to regulatory changes and project development risks – that make targeted and effective risk management essential. A professional approach to risk mitigation includes thorough market analysis, clear investment objectives, and diversification across asset classes and geographic regions. In addition, regular assessments and close cooperation with experienced project partners are crucial in order to identify and manage risks at an early stage. With comprehensive risk management, investors can harness the full potential of real assets while hedging their portfolios.