Three in four advisers expect to increase allocations to real assets over the next 12 months, according to research by TIME Investments.
TIME quizzed 200 financial advisers, wealth managers, discretionary fund managers, fund selectors and investment analysts on their expectations for the coming year.
The researchers found 76% of those surveyed expect to increase their allocation to real estate over the next 12 months, and 74% said the same thing about infrastructure.
In terms of the reasoning, a desire to de-risk portfolios through diversification was mentioned by two thirds of those questioned (67.5%), an increased focus on ESG by 60.5% and a desire for secure income streams was referred to by 44.5% of those taking part.
A somewhat bearish outlook on markets generally has also played a role in forming these plans.
The researchers found 70% of the professionals questioned predicted a challenging economic climate and investment environment this year, and said they do not expect conditions to improve for at least 12 months.
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Andrew Gill, manager of TIME:UK Infrastructure Income, said: “In the short term, we share the view of advisers that uncertainty and volatility is likely to persist.
“However, we are seeing values stabilise in most real estate and infrastructure sectors and the reduction in bond yields seen in late 2023 should support this further. Traditionally, reducing bond yields have been a catalyst for greater investor interest in real assets, making conditions more supportive for a return to growth.
“We have also seen a significant change in market conditions and expectations with UK inflation dropping materially,” Gill added. “This could lead to earlier rates cuts than previously expected with forecasters, such as Capital Economics, moving forward their expectations for central bank rate cuts.
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“With economic growth likely to remain subdued, sectors with robust and growing cash flows, such as real estate and infrastructure, are likely to outperform over the long term. Growing cash flows should also continue to fuel income and dividend increases in most real asset sectors.”
