What is a Real Asset?
A real asset is a tangible, touchable asset that has value.
How Does a Real Asset Work?
For example, Company XYZ's factory is a real asset, its fleet of cars are real assets and even its cubicles are real assets. However, its brand power is not a real asset, even though it might have value.
In the investing world, real assets are an asset class generally for investors who are particularly concerned about inflation, currency prices or other macroeconomic factors. These real assets might include gold, oil or real estate, for example.
Why Does a Real Asset Matter?
Real assets are not financial assets, which get their value from a claim on other assets. Real assets, rather, derive their value from their own intrinsic and inherent qualities. They can be very useful in hedging a portfolio, but they also require storage space and even maintenance. This can increase the cost of buying and selling them.