Investors are expecting to increase their allocations to real assets over the next 12 months, new research published by TIME Investments has indicated.

TIME has suggested this means that they could benefit from macro conditions which are looking more favourable for real assets in 2024, as discounts could continue to close for listed assets.

The findings were based on a study with 200 UK wealth managers, financial advisers, discretionary fund managers, fund selectors and investment analysts.

TIME said that the catalyst to increase allocation to real assets is driven by several factors. These included a desire to de-risk portfolios through diversification (67.5%), an increased focus on ESG (60.5%) and a desire for secure income streams (44.5%).

The research also showed that the majority (70%) of advisers predicted a challenging economic climate and investment environment and did not expect conditions to improve for at least 12 months.

“In the short-term, we share the view of advisers that uncertainty and volatility is likely to persist,” said fund manager of TIME:UK Infrastructure Income, Andrew Gill. “However, we are seeing values stabilise in most real estate and infrastructure sectors and the reduction in bond yields seen in late 2023 should support this further. Traditionally, reducing bond yields have been a catalyst for greater investor interest in real assets, making conditions more supportive for a return to growth.

“We have also seen a significant change in market conditions and expectations with UK inflation dropping materially. This could lead to earlier rates cuts than previously expected with forecasters, such as Capital Economics, moving forward their expectations for central bank rate cuts.”

“The UK economy may escape a technical recession, but in the very near-term, most economic forecasters are expecting slow economic growth.”

Gill added: “With economic growth likely to remain subdued, sectors with robust and growing cash flows, such as real estate and infrastructure, are likely to outperform over the long-term. Growing cash flows should also continue to fuel income and dividend increases in most real asset sectors.”

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