The 20-Teens: They’ve Been Real
December 18, 2019 | Bloomberg
At the outset of this decade, there was a wide belief in “realization” — moving toward real assets as central banks printed money. The argument, perhaps most famously expressed by JPMorgan Asset Management, was that real assets could hold their value in the likely event of inflation. For big pension funds and endowments, investments in infrastructure, property, or even farmland seemed very appealing. They offered a way to exploit such investors’ key advantage; their ability to withstand illiquidity.
At the end of the decade, inflation has failed to reappear, and interest rates have remained very low. But realization hasn’t fared all that badly. Lack of infrastructure continues to bedevil the world. Big Keynesian spending on improving the dilapidated fabric of the U.S. might be justified on purely practical grounds, and two successive presidents have set out with the aim of improving infrastructure — and failed to achieve it. Despite all this, sinking money into infrastructure would have worked out OK. This chart shows the total return on S&P’s global infrastructure index, which includes 75 large listed groups from around the world, compared to the MSCI All Countries World index.
