WHY REAL ASSETS? YOU ASKED, WE ANSWERED

Real asset industries are a niche market segment, and our strategy encompasses a niche approach to the space. To better understand our strategy, and the problems it solves for investors, we wanted to take a step back and look at the basics.

Here are a couple questions we get asked from allocators about the strategy:

What type of client is your real assets strategy suited for?

It’s ideal for an investor interested in owning high-quality real asset businesses that will not only be around in the next 10-15 years, but successfully navigate what’s bound to be a complex and highly adaptive period for these industries as policy, economic and technology forces try to minimize the effect of atmospheric emissions.

These are capital intensive businesses with tangible assets in the ground. That’s increasingly rare and a good contrast to broader equity indices, where the underlying value of many companies is tied up in intellectual property and intangible assets.

But selecting the right real asset businesses to own is an increasingly complex endeavor. Historically, these have been mature, static industries. Suddenly, to be both economically and environmentally sustainable, business models are going to need to evolve a great deal, and evolve quickly. That’s an environment that is ripe for active management, and requires a deep focus on the space that may not have been needed a decade ago.

Separately, this strategy should also appeal to investors who want to move the needle in reducing carbon emissions. We are providing capital to businesses that will have a far greater impact on carbon emission reduction than the current options people have in a traditional ESG portfolio today. The industries we follow are currently responsible for 70% to 80% of U.S. carbon emissions. Yet they are also a critical cog in the supply chains of nearly all other industries, whether one is looking at renewable energy technologies or cloud computing. Meaningful reduction in athropegenic emissions simply doesn’t happen without investment within these industries.

What problems does your strategy solve for investors?

For an allocator who is interested in exposure to real assets, we can help them avoid stranded asset risk and at the same time take advantage of the growth opportunities that will develop in this space over the next decade.

Think of it this way: If you’re interested in real asset businesses, the natural question is how do you invest in the space productively when disruption may begin to define what is often thought of as staid, slow-changing industries?

A global focus on reducing carbon emissions is probably the greatest catalyst for change real asset industries have ever experienced. There will be some companies and subindustries that face existential risk and won’t be here in 10 years, yet there will be other businesses worth multi-billions that are not in existence today. Change of this magnitude requires an intensive focus on the space to navigate it.