Abstract

The resurgence of inflation risk has revealed stark contrasts between public and private real asset investments, particularly in infrastructure and real estate. Using granular data on 1,291 private infrastructure deals and 4,377 private real estate deals, along with private fund returns, this study delves into the differential performance of these asset classes, including an analysis of the recent inflationary period. We uncover that private real assets, especially those in opportunistic strategies, appear to have outperformed their public counterparts during the recent inflationary period. This outperformance is partially explained by sector composition but is also related to exposure to inflation and the real interest rate (r∗). Our findings add context to traditional notions of inflation hedging and a potentially unique advantage of private investments in certain macroeconomic environments.

Authors

Prof. Gregory W. Brown, UNC Institute for Private Capital and Kenan-Flagler Business School
Prof. Christian Lundblad, UNC Kenan-Flagler Business School
William Volckmann, UNC Institute for Private Capital and Kenan-Flagler Business School