The Foundation Investment Group

The Real Assets investment category includes:

real estate
infrastructure
natural resources
commodities

As hard, non-financial 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 non-correlation to traditional stock and bond investments. Please read below to understand more about correlation, low correlation, and non-correlation.

When added to a traditional investment portfolio, Real Asset investments offer the potential for more effective diversification, lower correlation to traditional investments, and reduced portfolio volatility.

Investors should note that diversification does not assure against market loss and there is no guarantee that a diversified portfolio will outperform a non-diversified portfolio.

Real Estate investments can be further sub-divided into direct real property, non-traded real estate securities, and traded real estate securities. These three sub-categories of real estate investment offer different characteristics and can bring different benefits to a portfolio.

_____________________________________________________________

Click here for a printable document titled “Real Estate Update, February 2011”

The above article is reprinted with permission from Equity Resources Investments, LLC. Please keep in mind the thoughts and opinions offered therein are not to be construed as investment advice and may be forward-looking but do not guarantee any investing outcome. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results.
_____________________________________________________________

Correlation is an important concept to grasp in order to understand and appreciate Real Asset Investments and how they can add potential value to a portfolio.

Correlation refers to how securities perform or asset prices move in relation to one another over time. A correlation of 1.0 indicates that two securities or assets move in exactly the same direction. A correlation of negative 1.0 indicated movement in exactly the opposite direction. A zero correlation indicates no relation in the movements of securities or asset prices.

Real Asset investment strategies have a history of low correlation to traditional stock and bond investments, and as a result have the potential to behave differently in varying market conditions.

Low correlation has the potential to moderate the effect on the portfolio from shocks that may hit certain markets, asset classes, or investments. If an investor's goal is to secure higher returns at a lower level of risk, then adding Real Asset Investments to a traditional stock and bond portfolio may be an attractive option although there is no guarantee.

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. There is no assurance that the investment objective will be attained. Investors must meet specific suitability standards and understand these investments are for a long-term investment horizon.