Real assets have found a place in the strategic asset allocation mix of most institutional investors and can play multiple roles in a diversified portfolio including total return potential, inflation protection and lower correlations to traditional equity and fixed income.
Most portfolios have two broad objectives: income and growth. Bonds have traditionally been used to generate portfolio income, while equities are often employed to achieve growth. In our view, real assets should complement a portfolio’s growth and income allocations because of added benefits of inflation protection and lower market correlations.
Adding real assets requires a well-defined investment objective, as well as a clear plan for implementation, including the size of the real assets allocation within the overall portfolio, the mix of real assets exposures, and the vehicles by which these exposures will be delivered. Whether a real assets allocation is attained through direct exposures or through a listed real assets portfolio, skilled portfolio allocation capabilities are required to maintain portfolio objectives and react to changing market regimes over time.
Our investment strategies focus on key Real Asset sectors:
• Metals & Mining
• Real Estate
• Timber & Forestry
Capital Innovations is focused on building managed and advised solutions that are intended to enhance our clients’ private markets programs and may include the following services:
Capital Innovations’ managed solutions are typically focused on small-to-mid sized investors and are customized for each individual client’s needs. Our advised solutions cover all private markets Real Asset strategies and cater to larger institutions with internal staff dedicated to private markets.
We invest into private market Real Assets through a combination of primary, secondary fund investments and direct/co-investments. Investment activities for all three investment types are fully integrated. We believe that everything needs to fall under the same investment philosophy, and that the GP relationships formed through primary investing are essential to sourcing and executing secondary investments and direct/co-investments.
Our approach to secondaries builds on our primary investment activity and is consistent with our overall investment philosophy. This means avoiding auction-driven transactions and focusing on less competitive situations where the process is either controlled by the fund manager or directly sourced from other investors. It also means focusing on smaller transactions in the specialized strategies and segments we favor and focusing on those transactions that are not as straightforward to assess.
By directly investing into portfolio companies alongside other investors, participants expect higher returns, increased portfolio transparency, higher control and a reduction in overall fees. We believe that investing directly alongside a private equity firm should only be pursued when all parties - the portfolio company as well as investors and the fund manager - can benefit from it. Our approach has been to leverage our strong primary fund manager relationships. In addition to the requirement that any transaction be within their core strategy, ensuring maximum alignment of interest with the fund manager.
We provide global advisory services to investors relating to the set-up and management of a private markets Real Assets program alongside investment-specific advisory services. We provide global advisory services primarily to clients and investors who seek to expand and/or further professionalize their private market investing activities. Our services include the design and implementation of a private markets investment program, investment allocation planning (e.g. by industry, asset class, geography, or investment segment), investment level steering, cash flow planning, portfolio structuring, monitoring, risk management, and reporting.
Nothing on this website should be deemed to be investment advice. The views and forecasts expressed in any materials on this website are as of the date indicated, are subject to change without notice, may not come to pass and do not represent a recommendation or offer of any particular security, strategy, or investment. Capital Innovations, LLC has no obligation to provide revised assessments in the event of changed circumstances. There can be no assurance that the strategies described will achieve their objectives and goals. Capital Innovations® is a registered trademark of Capital Innovations, LLC. All content is subject to our terms and conditions of use policy.
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