With U.S. inflation rapidly rising to levels not seen since the 1970s, investors need to analyze their portfolios’ inflation protection more closely. There are a variety of options such as timber, farmland, energy, commodities and real estate. Real estate has always been the most heavily invested in real asset for U.S. defined benefit plans. Plans have allocated about 5% of their assets to real estate for many decades.
Public pension plans have continued to increase allocations to real estate, while corporate plans focused on liability-driven investing and pension risk transfers have seen the same allocations for many years.
In addition to long-term allocations to real estate, plans sponsors have increased allocations to energy and infrastructure over the past decade. Details of more than 1,500 real asset hires can be found in the Searches and Hires database. Private real asset funds, especially infrastructure funds, have seen enormous increases in allocations from institutional investors. The largest funds now easily raise more than $10 billion. Detailed real asset and real estate fund data can be found in the Research Center.
