As we pass the 10-year anniversary of the Global Financial Crisis, it is worth considering what the last decade has brought to investors in the UK.
Most notably, it has brought a period of zero interest rates and with inflation running at approximately 2% over the same period, savers who have left money in the bank have lost 20% of its value. This explicit interest rate policy has forced investors to take higher risks. People have either invested in bonds or have looked to the equity market to generate capital return and income.
From 31 December 2008 to 31 December 2017, the FTSE 100 rose from 4,434.17 to 7,687.77, yielding a 73% price return. The UK gilt market performed well over the same period making the traditional, ‘balanced’ portfolio of 60% equities and 40% bonds hard to beat.
If we fast forward to the present day, we find that some things are the same, while some are different.
Bank interest rates remain very low in comparison to inflation, and this period of negative real rates looks here to stay.
The traditional markets are not performing as they have before. In 2018, the FTSE has fallen nearly 10% and the 30-year bull market in bonds is beginning to run out of steam.
How has Reyker responded to this? We have, over the past few years, been developing expertise in real assets. These are assets that have application in the real world and include property, infrastructure, secured finance, commodities and shipping. Investing in real assets is very different to buying and selling equities and bonds, and so Reyker has put together a team that is dedicated to analysing this universe.
Why are real assets beneficial to investors?
- Diversified income: real assets will normally provide a high dividend yield of 4%+, which is derived from completely different sources to traditional bond and equity funds.
- Inflation protection: real assets will frequently have an inherent inflation protection due to the type of asset they are and their income stream.
- Portfolio diversification: real assets are largely uncorrelated to the traditional bond and equity markets and therefore including them as part of a larger portfolio will increase the quality of overall returns.
Reyker has launched a dedicated UK UCITS fund, the VT Reyker Real Assets Fund, to give investors the opportunity to gain a diversified and daily liquid exposure to wide market of real assets.
The fund is targeting an annual dividend yield of 4% and a total return of 6-7%. There is a founder share class available for early adopters of 0.5% per annum.
More information is available on our dedicated website: www.reykerfunds.com
Please contact firstname.lastname@example.org or 020 7397 2590 if you would like to discuss this in more detail.
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance or any yields quoted should not be considered reliable indicators of future returns. This is a commonly used industry risk warning that simply means history is not necessarily a guide to the future. Whilst we strive to achieve the Fund’s investment objective, we cannot guarantee that it will. Both performance and capital can be at risk.