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Thought Leadership

Take it offshore, with listed real assets

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Take it offshore, with listed real assets

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home »

Take it offshore, with listed real assets

13-11-2018

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Executive Summary

Consider your alternatives for offshore investing…

Investors typically utilise traditional assets such as equity, fixed interest and cash to target offshore diversification. However, real assets can provide a valuable alternative approach and bear consideration where they can overcome the “investability” hurdle. For example, investors often don’t have the capacity to invest directly into real, tangible assets such as property, commodities, oil or agricultural land. But, investing in listed real-asset funds as a viable alternative to investing directly into real assets, provides the diversification benefits of real assets with the added advantage of higher liquidity.

The universe of listed real assets can be difficult to navigate, and local South African investors should consider the following quantitative properties of real assets, when looking to invest offshore:

a) How are listed real assets different from listed traditional assets by virtue of their diversification benefits?
b) What is the appropriate proportion of a portfolio that should be invested in listed real assets under different investment strategies?
c) Which parts of the traditional portfolio’s assets should be replaced by listed real assets?

Another important consideration is your investment approach. For instance, should you invest in an equally weighted basket of real-assets, or would combining the assets via a risk-parity approach be more preferable?

By Jaundré Scheltema and Guy Fletcher, Client Solutions & Research at Sanlam Investments.

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