The case for real assets

Real assets should outperform traditional stocks and bonds as the global economy moves from abundance toward scarcity, with persistent inflation, supply constraints and broader growth favoring tangible assets.

• The authors expect the next decade to bring slower real growth, stubbornly high inflation and greater volatility than the previous 10 years, weakening the diversification provided by bonds.
• Structural demand is supported by AI-related data intensity, reshoring and friendshoring, aging populations, decarbonization and rising commodity consumption; beneficiaries include data centers, cell towers, logistics assets, ports, senior housing, healthcare facilities and energy infrastructure.
• Global real estate, listed infrastructure and natural-resource equities are described as inexpensive relative to their own histories, while broad equities remain expensive; real assets also had a standout 2025, with virtually all categories delivering double-digit returns.
• The base case is for higher 10-year nominal yields driven mainly by inflation expectations, but lower real yields reaching a 1.75% year-end 2026 target; historically, falling real yields combined with rising inflation breakevens favored real assets.
• The illustrative real-assets blend contains 27.5% real estate, 27.5% commodities, 15% natural-resource equities, 15% infrastructure, 10% short-duration fixed income and 5% gold, and is presented as a source of inflation sensitivity, diversification and attractive risk-adjusted returns.

Takeaway: Investors should consider a diversified real-assets allocation rather than relying mainly on AI-led mega-cap equities and bonds, although the forecasts and historical relationships are not guaranteed and the blend is not an actual portfolio.