Tangible assets, longer timeframes
Real assets – tangible investments such as infrastructure, farmland and natural capital – are gaining traction owing to their ability to offer diversification, stable income and inflation resilience. Despite a challenging 2024, private infrastructure has grown markedly, now valued at approximately $1.3tn after quadrupling in a decade, driven by demand for renewable energy, digital infrastructure and social assets, according to Foresight Group.
While interest in private markets remains strong, private wealth investors are still getting to grips with the complexities of increasing exposure. “Almost every firm we’ve talked to is either figuring out a way to bring private markets into their portfolios or figuring out what’s the optimal allocation,” says Carlin. “Usually, that means increasing where they are today.”
These areas, particularly equity infrastructure, typically involve very long-dated investments, with lengthy construction and development timelines, plus complex legal and regulatory considerations, making them harder to access. On the other hand, private wealth investors have the flexibility to be able to afford the long-term investment and take advantage of the downside risk mitigation.
“Wealthy families in general are not trying to meet certain liability management. They don’t have to fund an annual budget for their family,” Todd Rich, Co-founder and Head of Real Estate at Declaration Partners recently explained on The Distribution podcast. “As a result, they can be very, very flexible and they can wait.”
Overall, the diversification, income and value protection potential of private markets make them a continually attractive investment. But with increasing complexity across each asset class’s fundamentals, taking a proactive approach to manager selection, portfolio research and due diligence has never been more important for private wealth investors looking for smart diversification.
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