William Thomson March 17, 2021

Portfolio Structure: A Critical Consideration for Real Asset Investing

Real assets provide distinct benefits to a broader portfolio, but there are several investment vehicles and fund structures investors can use to access the asset class. Questions also arise over where, exactly, real assets should fit within that broader portfolio.

In a recent webcast, portfolio managers Will Thomson and Chip Russell explained why they believe a long/short vehicle is the optimal structure for real asset investing, and how they see the strategy fitting with other asset classes. A brief excerpt from the webcast explains:

Q: You invest in real assets through a long/short strategy. Why do you believe that is the optimal approach to the space?

Will Thomson: Real asset businesses are generally cyclical. That means that there are opportunities on both sides of the cycle. In order to take advantage of them, you need to be long-short. You miss half the cycle if you’re long only.

Our investible universe in energy materials and heavy industry is roughly 2,500 companies that span nearly 45 sub-industries. They have a market cap of 14 trillion. The market is going to rotate in and out of these industries. Different industries are going to be hot – or not – at different times. The ability to move with the market is quite important, and I think that a long-short strategy allows us to do that better than a long-only strategy.

Q: Where does your strategy best fit within a broader portfolio?

Will Thomson: The majority of our investors put us into one of two places. They either put us into an alternatives bucket as a long-short strategy, or in their real asset bucket as a differentiated way to play an asset class that is generally monopolized by private equity.

If you are interested in listening to more of this webcast on Real Asset Investing, please click on the graphic below.

Real Assets. Real Returns. Listen to the call replay with Massif PM's.