Key Takeaways
- • Middlefield Group executives Dean Orrico (President and CIO) and Robert Lauzon (Managing Director and Deputy CIO) argue that real assets such as real estate and infrastructure offer portfolio diversification, reliable income, and potential inflation protection through contractual rent and rate escalators.
- • Orrico says industrial real estate tied to e-commerce logistics is preferred over traditional retail such as shopping malls, citing Amazon's continued build-out of distribution infrastructure.
- • Lauzon cites a BlackRock survey of U.S. institutional investors showing they are most likely to increase allocations to real assets relative to other asset classes.
- • Orrico states that private real assets have historically generated competitive total returns versus public securities, and a BlackRock survey expects private equity and infrastructure to outperform traditional equities and fixed income over the next 10 years.
- • Middlefield recently launched the Middlefield Global Real Asset Fund, a partnership with The Blackstone Group combining publicly traded real asset securities with private limited partnership investments.
Summary
This sponsored content from Investment Executive features Middlefield Group executives Dean Orrico, President and Chief Investment Officer, and Robert Lauzon, Managing Director and Deputy Chief Investment Officer, who make the case for real assets as a diversifying allocation for institutional and private investors. The article notes that large institutional investors such as pension funds are reassessing their objectives, and that many high-quality real estate and infrastructure assets remain in private markets, which makes access difficult for investors without structured approaches or substantial capital.
On the rate environment, Orrico argues that low interest rates support real assets because these businesses use leverage and lower-for-longer rates support higher free cash flows. Lauzon adds that real estate and infrastructure assets with contractual rent or rate escalators behave somewhat like bonds with growing payments and can act as an inflation hedge. The authors also point to the long life of these assets as a fit for pension liabilities that are long term in nature.
The executives identify sector-level opportunities. Orrico favours industrial real estate leased to logistics and distribution tenants serving e-commerce, citing Amazon's ongoing build-out of logistics facilities. He also notes rising demand for multi-residential rental property driven by housing prices, urbanization and immigration in North America and Europe. Lauzon highlights tower companies, data centres and, in Europe, demand for nursing homes and public health care infrastructure as demographic trends favour real assets.
On structure, the article argues that private equity real asset returns are driven by factors distinct from public securities, which can be affected by algorithmic trading and short-term sentiment. Private investors, Lauzon says, can gain board representation and greater access to information. Orrico states that private real assets have historically delivered competitive total returns compared with publicly traded securities, and cites a BlackRock institutional survey expecting private equity and infrastructure to outperform traditional equities and fixed income over the next decade. Lauzon adds that private real assets have low historical correlations to traditional equities and fixed income, which can reduce portfolio volatility.
The piece acknowledges barriers for individual investors, including high investment minimums and lock-up periods, and advises that specialized managers are typically needed. Orrico lists track record, economies of scale, alignment of interest and specific expertise as key selection criteria. The article closes by highlighting the recently launched Middlefield Global Real Asset Fund, an actively managed strategy developed with The Blackstone Group that blends public real asset securities with private limited partnership investments. Because the content is sponsored, its claims reflect the views of Middlefield's executives rather than independent analysis.
On the rate environment, Orrico argues that low interest rates support real assets because these businesses use leverage and lower-for-longer rates support higher free cash flows. Lauzon adds that real estate and infrastructure assets with contractual rent or rate escalators behave somewhat like bonds with growing payments and can act as an inflation hedge. The authors also point to the long life of these assets as a fit for pension liabilities that are long term in nature.
The executives identify sector-level opportunities. Orrico favours industrial real estate leased to logistics and distribution tenants serving e-commerce, citing Amazon's ongoing build-out of logistics facilities. He also notes rising demand for multi-residential rental property driven by housing prices, urbanization and immigration in North America and Europe. Lauzon highlights tower companies, data centres and, in Europe, demand for nursing homes and public health care infrastructure as demographic trends favour real assets.
On structure, the article argues that private equity real asset returns are driven by factors distinct from public securities, which can be affected by algorithmic trading and short-term sentiment. Private investors, Lauzon says, can gain board representation and greater access to information. Orrico states that private real assets have historically delivered competitive total returns compared with publicly traded securities, and cites a BlackRock institutional survey expecting private equity and infrastructure to outperform traditional equities and fixed income over the next decade. Lauzon adds that private real assets have low historical correlations to traditional equities and fixed income, which can reduce portfolio volatility.
The piece acknowledges barriers for individual investors, including high investment minimums and lock-up periods, and advises that specialized managers are typically needed. Orrico lists track record, economies of scale, alignment of interest and specific expertise as key selection criteria. The article closes by highlighting the recently launched Middlefield Global Real Asset Fund, an actively managed strategy developed with The Blackstone Group that blends public real asset securities with private limited partnership investments. Because the content is sponsored, its claims reflect the views of Middlefield's executives rather than independent analysis.
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