Commodities Physical commodity supply dynamics are determined by production (in the case of hard commodities), seasonal crop yields (for soft commodities), and inventory levels in the short term, while commodity end user/consumer use of these basic inputs drives ultimate demand. Supplies of physical commodities are determined by production and inventory levels and secondarily by the…
Commodity Investment Features Commodities themselves do not generate cash flows but usually incur costs (cost of carry introduced in derivatives learning modules), such as those for transportation, storage, and insurance for physical commodities. Investors seek to benefit from commodity price appreciation (in excess of carry cost) based on their future economic value rather than actual use…
Natural resources comprise different production inputs that are basic to the economy and everyday life: A notable proportion of natural resource investments are directly through farmland, raw land with exploration and mining rights, and timberland. Direct ownership spans a broad spectrum: from farmers producing grain to institutional investors building solar farms. Land Investments vs. Real…
Infrastructure Investment Characteristics Infrastructure investors expect the assets to primarily generate stable long-term cash flows that also adjust for economic growth and inflation and secondarily expect capital appreciation, depending on the type and timing of their investment.
Infrastructure investments have a societal purpose; facilitate broad economic, technological, and social development purposes; and usually combine land, buildings, and other long-lived fixed assets. Infrastructure supports public transportation, airports, utilities (water, gas, and electricity), and more recently, information (telecommunication, cable, and wireless networks). Infrastructure Investments Infrastructure investments often involve a consortium that combines one or…
Source of Returns The return on real estate investments comes from income or asset appreciation or a combination of both. Income-producing real estate generates income primarily from the collection of rental or lease payments, including lease renewals. Expenses include direct and indirect management expenses, such as maintenance and improvement costs. Income-producing real estate investment is…
Both individuals and institutions invest in real property: either in residential or commercial real estate. Residential real estate, or the housing market, consists of individual single-family detached homes and multi-family attached units, which share at least one wall with another unit, such as condominiums, cooperatives, townhouses, or terraced housing. Commercial real estate includes primarily office…
Private Debt Categories Venture debt is private debt funding that provides venture capital backing to start-up or early-stage companies that may be generating little or negative cash flow. Risk–Return of Private Debt Private debt investments may provide higher-yielding opportunities to fixed-income investors seeking increased returns relative to traditional bonds. Private debt funds may generate higher returns…
Private capital is the broad term for funding provided to companies that is not sourced from the public markets, such as from the sale of equities, bonds, and other securities on exchanges, or from traditional institutional providers, such as a government or bank. Capital raised from sources other than public markets and traditional institutions and in…
