RA: High Debt Allocation Is A Problem Here

2025-06-04 08:06:44 ET

Summary

• Brookfield Real Assets Income Fund offers high income but lacks sufficient equity exposure for true real asset inflation protection.
• The fund's heavy allocation to U.S. dollar-denominated debt makes it vulnerable to dollar devaluation and limits its wealth preservation benefits.
• The fund is showing a marked preference for fixed-rate debt over floating-rate securities, which is nice given the Fed's near-term path.
• Distribution coverage is weak, with net asset value declining and distributions not fully supported by income or gains, risking future cuts.
• Despite a 10% discount to NAV, the fund's structure and performance issues make it less attractive versus peers and not ideal for long-term purchasing power preservation.

The Brookfield Real Assets Income Fund ( RA ) is a closed-end fund that investors can purchase as a method of earning a very high level of income from the assets in their portfolios while also achieving partial ownership of “real assets.” Real assets are things such as commodities, real estate, infrastructure, and precious metals that, in theory, should hold their value over time and help investors maintain their purchasing power. In a few recent articles (such as this one ), I showed that inflation is likely going to be a real problem going forward and investors should focus their investment money on things that are likely to maintain their purchasing power as opposed to fiat assets (such as U.S. dollars) that will almost certainly be devalued as time goes on....

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