Brookfield CEO Flatt Says Hard Assets Rule Amid Negative Rates

  • ‘You’re getting paid enormous amounts’ versus Treasuries
  • Canadian asset manager has $250 billion under management

The head of Brookfield Asset Management Inc., Canada’s biggest alternative-asset manager, said institutional investors want real assets in a world of negative-yielding government bonds.

The firm has raised $27 billion for its flagship funds in the past 18 months from nearly 250 clients looking to buy hard assets like real estate and infrastructure, the largest amount of capital Brookfield has closed for a series of funds. Brookfield has $250 billion in assets under management.

"If you look at what we can earn on real assets across the spectrum, you’re getting paid enormous amounts compared to a Treasury bill or U.S. Treasuries," Chief Executive Officer Bruce Flatt said on a call with investors Friday.

Asset managers around the world are looking for alternate investments as $10 trillion in government bonds are yielding negative returns. Bill Gross suggests buying gold and real estate and keeping 5 percent in cash. Pimco’s Mark Kiesel prefers U.S. corporate bonds and emerging market debt.

There will still be a strong bid for U.S. Treasuries for a long time due to maturing negative-yield government bonds, which will flatten the 5- to 10-year yield curve more than expected, Flatt wrote in a letter to shareholders on Friday. A further $5 trillion could recirculate into U.S. Treasuries from European and Japanese government debt, he added.

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