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Real assets is an investment asset class that covers investments in physical assets such as real estate, energy, and infrastructure. Real assets have an inherent physical worth.[1] Real assets differ from financial assets in that financial assets get their value from a contractual right and are typically intangible.
Real assets are categorized into three categories:
- Real Estate: REITs, commercial real estate, and residential
- Natural Resources: Energy, Oil & gas, MLPs, timber, agriculture, solar, mining, and commodities
- Infrastructure: Transportation (roads, airports, railroads), utilities, telecommunications infrastructure
Real assets are appealing to investors for four reasons: high current income, inflation protection / equity appreciation, low correlation to equity markets, and favorable tax treatment.[2][3][4]
- ^ Some investment professionals have argued that intellectual property (such as royalties and patents) and insurance (life and annuities) should be included as real assets.
- ^ For example, in the United States, REITs are treated as pass-through vehicles and not taxed at corporate level. In the case of exploration & development for oil and gas, there is accelerated depreciation.
- ^ "Real estate investment trust", Wikipedia, 2019-09-24, retrieved 2019-10-08
- ^ Cussen, Mark P. "Oil: A big investment with big tax breaks". Investopedia. Retrieved 2019-10-08.