Real Asset


DEFINITION of 'Real Asset'

Physical or tangible assets that have value, due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land and oil. They are appropriate for inclusion in most diversified portfolios - with their proportion dependent on the investor's risk tolerance and preferences - because of their relatively low correlation with financial assets , such as stocks and bonds. They are particularly well-suited for inflationary times, because of their tendency to outperform financial assets during such periods.


Real assets are a separate and distinct asset class from financial assets, whose value is derived from a contractual claim on an underlying asset, which may be real or intangible. For example, commodities and property are real assets, but commodity futures and ETFs, as well as real estate investment trusts, constitute financial assets whose value depends on the underlying real assets.

Higher carrying and storage costs, increased transaction fees and lower liquidity, are some common drawbacks of real assets in relation to financial assets.

  1. Real Estate

    Land plus anything on it, including buildings and natural resources.
  2. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses ...
  4. Asset

    1. A resource with economic value that an individual, corporation ...
  5. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  6. Financial Asset

    An asset that derives value because of a contractual claim. Stocks, ...
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  1. Are stocks real assets?

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  3. Does mutual fund manager tenure matter?

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  4. Do hedge funds invest in commodities?

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