The case for investing in real assets
Grids and networks that supply power and water, data centres that process bits and bytes of information, mines and quarries that extract copper, iron and uranium, and pipelines that deliver a steady flow of gas. These physical assets form the backbone of the modern digital economy.
According to Pictet Asset Management’s research, listed companies that own or operate these essential physical assets have historically generated stable, long-term cash flows, underpinning predictable and growing dividends across market cycles, and shielding against economic volatility.
Such companies can therefore play three core roles in a global equity portfolio: providing a diversified source of returns, a degree of inflation protection and the potential for long-term capital growth and income.
Owners of irreplaceable assets often benefit from structural barriers to entry, including local monopolies or regulated market positions. Just as it is impossible to build another international airport next to Heathrow, Changi or Zurich, existing mines and quarries face little threat of competition, thanks to geology, permitting constraints and high transport costs.
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