Real assets gain appeal amid inflation, rates

In response to sustained inflation and elevated long-term interest rates, Bank of America is highlighting the rising appeal of real assets in its newly released 2025 Specialty Asset Management (SAM) Outlook. The annual report, released Wednesday, provides analysis on key nonfinancial assets—commercial real estate (CRE), farmland, timberland and energy—and their role in portfolio diversification and long-term wealth strategies. 

“Characteristics of real assets, such as generally being uncorrelated with traditional investments and serving as a hedge against inflation, are increasingly relevant in the current environment,” said Ken Shepard, a Specialty Asset Management executive at Bank of America Private Bank. “For well-informed, long-term investors, 2025 will be a good year to selectively build positions in certain real asset sectors.” 

Commercial real estate is showing signs of renewed investor confidence. After navigating years of disruption, the sector is beginning to stabilize. Bank of America cites a rebalancing of supply and demand, along with signs of improved liquidity and steadier valuations, as indicators that investor sentiment is turning more positive in 2025. 

Farmland continues to offer a pathway to stability and diversification. The outlook suggests that the 2025 crop year may present new opportunities for experienced investors. As competitive pressures ease, farmland values are expected to remain stable or trend slightly downward, creating more room for strategic investment and long-term planning. 

Timberland is positioned as an attractive option for long-term investors with lower risk profiles. The report notes that timber assets benefit from biological growth, which remains largely unaffected by market cycles and geopolitical risks. This characteristic makes timberland a unique and resilient addition to a diversified portfolio. 

Energy assets are also gaining traction amid rising global demand. According to the report, a combination of factors—including population growth, expanding industrial activity, and increasing living standards in emerging markets—is driving up energy consumption. In the United States, the energy mix is expected to shift further toward natural gas, renewable sources, and other low-carbon options, reflecting both policy trends and market forces. 

The report reflects a growing investor interest in tangible assets that can offer resilience in times of economic uncertainty. More information on the SAM Outlook and real asset strategies is available through Bank of America Private Bank.