Many of the clients and friends of Schneider Downs Wealth Management Advisors have heard my teammates and I espouse the virtues and potential investment benefits of owning real assets (infrastructure, farmland, timberland, high quality commercial real estate) in a client portfolio.
From an investment standpoint, we believe the low correlation to traditional asset classes like stocks and bonds, highly contracted cash flows, and ability to grow cash flows with inflation are among the most prominent reasons to allocate capital to real assets if they fit within your investment allocation.
If one were to attend our investment meetings, you would hear me describe real assets as a “high floor, low ceiling” investment that can add ballast AND return prospects to a client portfolio. Our partners over at Versus Capital put it more succinctly: the functioning of modern society requires the use of real assets. When you take a step back and think about it, try to envision your day without the use of real assets. Turning on the bedroom lamp as you wake up in the morning (electricity), moving the dial in the shower toward warm water, crossing a bridge or bridges if you live in Pittsburgh (infrastructure), and stopping at the grocery store for food on your way home. All of these daily functions that are so integral to our daily lives involve real assets.
In May, several of my teammates and I were fortunate enough to visit Timberland assets in Jackson, Ohio (an hour or so south of Columbus). BTG Pactual’s US investment arm, TIG (Timberland Investment Group), showed us the timber assets that were originally owned by the Mead Paper company (for those of us old enough to remember, back to school shopping could not be complete without a few Mead spiral notebooks and their formidable “Trapper Keeper”). The timber assets had many different species of trees, but one species that TIG honed in on was “white oak.” Many of you may already know that white oak trees are coveted for their durability and beauty, and demand is high in the furniture, flooring and cabinet space. What may surprise the non-bourbon/whiskey aficionados reading this email is that “white oak” trees are highly coveted by the whiskey industry. White oak barrels impart bourbon/whiskey’s color and improve the taste and finish as well.
While visiting our timber assets, my colleagues and I were treated to a tour of the Speyside Bourbon Cooperage in Jackson, Ohio. Our tour guides from Speyside and TIG guided us through this world class manufacturing facility, viewing some of the best bourbon barrels on the planet. What made the tour even more special was the knowledge that some of the timber assets we viewed a few hours prior, would likely end up at Speyside; yet another example of a real asset making its way into our daily lives.
Versus Capital sat down with CIO, Casey Frazier & Managing Director, Spencer Schomer to discuss real assets. In this video, they take a look at the historical performance of real assets during periods of high inflation and rising interest rates. We encourage you to check it out here to learn more.
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.