“The bond market has had its worst performance since 1949 and stocks have broadly sold off,” says Maggie Meng, Senior Investment Analyst, Brompton Funds. “Real assets have generated superior performance against the traditional 60-40 portfolio so far in 2022 and have outperformed stocks so far as well. Energy and utilities are the only sectors with positive returns this year, both of which are part of real assets.”
In tandem with their natural hedge against inflation, real assets are also being bolstered by unprecedented levels of regulatory support for clean energy that include the Inflation Reduction Act passed in the U.S. and the RePowerEU plan in Europe.
Meng says the Brompton Sustainable Real Assets Dividend ETF is an example of a fund that provides high monthly distributions and the opportunity for capital appreciation during inflationary conditions. This is because it invests in an actively managed portfolio of Global Real Assets companies (primarily real estate, utilities, infrastructure, resources.) Additionally, the fund is complemented by a proprietary covered call options program that works to enhance monthly income.
“Our active covered call strategy allows us to take advantage of market volatility, particularly in environments such as the current market,” says Meng. “By selling call options on our portfolio holdings, we can harvest this volatility by generating option premiums that reduce the portfolio’s overall volatility while enhancing its income. Over time, these types of strategies can provide higher risk-adjusted returns for investors.”
The portfolio management team at Brompton use top-down analysis methodologies to identify attractive sub-sectors, and employ rigorous fundamental analysis, including the integration of Environmental, Social, and Governmental (ESG) factors, to focus the portfolio on well-positioned, large-capitalization Real Assets issuers.
