Real Assets Rake In Investments, PitchBook Says

Among alternative investments, real assets are receiving a torrent of new investment dollars, as asset allocators look for generally inflation-resistant assets that have a good long-term track record on returns.

For the four quarters ending March 31, the investment inflows of $159.7 billion were the strongest in five years. The money has gone to investment funds specializing in real assets, including private equity and master limited partnerships, according to a PitchBook report. And infrastructure has claimed the bulk of it, with oil and gas a distant second.

Real asset fund financial performances for the year through September 2021, the latest available, topped historical norms, and then some: They returned 18.5% collectively, far better than the 6.2% 10-year and 6.8% 20-year annualized results.

The explosion of new capital appears to be a gathering trend. Hilary Wiek, the research firm’s lead analyst for fund strategies and sustainable investing, wrote in the report that “we’re looking at rolling four-quarter fundraising, we do see a clear recent uptick in interest in real assets.” Alongside that, the real asset funds hold an enormous amount of uninvested capital, aka dry powder, awaiting deployment—some $322 billion.

For more stories like this, sign up for the CIO Alert newsletter. 

For the first quarter, the fundraising crown goes to KKR Global Infrastructure Investors IV, a new fund that closed in March. It raised $16.7 billion, which makes up almost 40% of the period’s inflow.

North America and Europe are getting the bulk of the new money, as opposed to Asia, which has garnered a mere 3% during the quarter.

The preference for infrastructure appears to stem in part from the $1.2 trillion package that Congress passed last year to upgrade the nation’s aging, crumbling physical plant—bridges, roads, ports, etc.

Right now, infrastructure commands more than 90% of all the new investments pouring into real assets. Wiek noted that rebuilding and constructing new roads and the like requires much more money than some other uses, such as oil and gas.

Oil and gas fundraising totaled less than 2% of real assets inflow in the first period of 2022. Energy producers, especially in the U.S., have said they don’t want to sink more money into drilling or equipment. PitchBook, though, believes that continued high oil and gas prices will eventually lead to more financial inflow to energy.

Funds targeting Europe and North America have led real assets fundraising in recent years at the expense of Asia. While Asia has represented 10% of overall fundraising since 2008, it accounted for just 3% of assets committed since the start of 2021.

Amid swelling inflation and rising interest rates, plus talk of a recession, some other asset classes have not been as successful as real assets in attracting fresh investment dollars.

Fundraising for private equity has dipped with the stock market’s plummet. Likely reason: the decreased chance of taking PE portfolio companies public. PE investor inflow shrank by 10% in the first quarter, compared with 2021’s last period, and by a third from last year’s initial quarter, Preqin data show.

Where to Invest in Real Estate Right Now, and Where Not to, Say 2 CIOs

Canada’s Largest Pension Fund Launches Real Estate JVs in U.S., India

Tags: PitchBook, Real Assets

Rob Manilla (right) will retire this month after 17 years leading The Kresge Foundation’s Investment Office. John Barker (left) will succeed Manilla in the VP & CIO role.

Rob Manilla, CIO of the private philanthropic foundation Kresge Foundation, is retiring this month after more than 17 years in the position. According to the foundation, Kresge’s endowment—which reported assets of $4.66 billion in 2021—has produced gains of nearly $4 billion during his tenure.

“Rob has curated one of the most creative and effective private endowments in the country, attracting in the process a superbly gifted group of young investment professionals,” Kresge President Rip Rapson said in a statement. “He has also helped shape the foundation’s grant-making and social investment practices through his expertise, experience and insight – and his deep commitment to our mission.” Rapson added that Manilla “has been engaged in every aspect of the organization’s culture, contributing with particular impact on our efforts to advance diversity, equity and inclusion.”

Manilla serves on the Bedrock Manufacturing Co. board of directors, and is an investment committee member of Boeing Corp., Trinity Health, the Detroit Institute of Arts and the Detroit Riverfront Conservancy. He is also a member of the board of advisers for Oakland University Business School.

For more stories like this, sign up for the CIO Alert newsletter. 

Manilla will be succeeded by Deputy CIO John Barker, who has been a senior leader with the foundation’s investment office since 2007. Barker has assisted Manilla in implementing the overall investment strategy at the foundation, developing asset class strategy, managing risk and liquidity, evaluating managers and researching investment opportunities. The foundation credits him with leading efforts to expand diversity, equity and inclusion of women and people of color within the industry and among those who manage investments on Kresge’s behalf.

Barker joined Kresge from the University of Notre Dame investment office, where he was assistant investment director for nearly five years. He received a bachelor’s degree in finance with a minor in accountancy from Notre Dame. Barker serves on the boards of the Children’s Foundation of Michigan and Forgotten Harvest, and in 2019 he was named to Crain’s Detroit Business’ “40 Under Forty” and was nominated in 2018 for a CIO magazine Innovation Award.