Big investors, faced with the prospects of low bond yields,
are trying to invigorate returns by turning to “real” assets. In contrast with
a conventional mix of stocks and bonds, large investors are now expressing a
growing desire to snap up real assets—everything from office buildings to
bridges to farmland, according to a new
BlackRock Inc. survey published Tuesday. The real assets are cyclical, generally more illiquid and do
carry more risk than safer bonds and stocks. But they they’re an en vogue
investment these days with pensions, insurers and endowments looking for ways
to counter a mild outlook for bonds and other traditional investments.
BlackRock surveyed 169 global clients which manage $8
trillion in assets. About 40% of the polled investors were in North America,
followed by 29% in Europe and 20% in Asia-Pacific. Some six in 10 investors
anticipate increasing their presence in real assets, BlackRock says. About half
of the investors said they wanted to add real estate and grow their presence in
private equity.
To fund those moves, about four in 10 investors said they
would decrease their investments in fixed income, and about a quarter will
reduce their cash allocations, according to BlackRock. More investors are
loosening up restrictions for their fixed-income portfolios, opening up
possibilities to buy emerging-market debt or U.S. bank loans.
It’s a challenging time for big investors, though
particularly for large U.S. public pension funds. People are living longer and
a wave of Baby Boomers is reaching retirement age, causing liabilities to
mushroom.
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