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Real Assets

The Real Assets investment category includes:

  • Real Estate – Funds investing in domestic and international real estate assets. We classify real estate investment opportunities into three primary categories or buckets with distinctive characteristics: Core, Value-Add, and Special Situations.

    • Core real estate transactions are the simplest to understand—these are purchases of stabilized, income-producing real estate with the intention of holding for the long term and harvesting predictable cash flow.

    • Value-Add situations often entail developing (either ground-up or re-developing an existing structure). Generally, a value-add investment will ultimately generate a core quality asset, but the investment period will be more centered around the transitional phase rather than the income harvesting phase.

    • Special Situations is a blanket term that encompasses a wide array of opportunistic transactions that could include investing in distressed properties, buying from a distressed seller, working out a non-performing loan, operating a non-traditional asset type, or looking at international and emerging markets.

  • Infrastructure – Funds investing in infrastructure assets such as pipelines, power generation assets, and toll roads.

  • Commodities – Investments in physical commodities such as gold, silver, and oil.

As hard, nonfinancial assets, real asset strategies have historically provided inflation protection to an investment portfolio over time. We classify real assets as alternative investments because there is a history of low or noncorrelation to traditional stock and bond investments.

Investing in alternative financial strategy investments may not be suitable for all investors and involves special risks such as risk associated with leveraging the investment, potential adverse market forces, regulatory changes, and potential illiquidity. Investors must meet specific suitability standards and understand these investments are for a long-term investment horizon.

A nontraded real estate investment trust (REIT) is a REIT that is not traded on any public stock exchange. A nontraded REIT lacks the marketable liquidity of a publicly traded REIT and may be difficult to redeem at any price. You should consult with your financial advisor and carefully consider your short-term and long-term liquidity needs. Real estate investments are subject to a high degree of risk because of general economic or local market conditions; changes in supply or demand; competing properties in an area; changes in interest rates; and changes in tax, real estate, environmental, or zoning laws and regulations. Real estate units/shares fluctuate in value and may be redeemed for more or less than the original amount invested. There is no assurance that the investment objective will be attained.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.