Asset-Backed Securities and Real Assets

Asset-Backed Securities (ABS)

Asset-Backed Securities are similar to Brazilian FIDCs—funds composed of large pools of receivables such as credit card debt, home loans, or car loans. These receivables are bundled together to create a single product that investors can buy.

A well-known example appears in the film The Big Short, where mortgage receivables rated triple C or triple B were packaged and sold as triple A or double A securities. This illustrates how low-credit assets were restructured into products with higher ratings, forming the basis of CDOs (Collateralized Debt Obligations).

ABS pool underlying assets such as mortgage bonds, credit card debt, or car loans, and sell them as one organized security. A deeper explanation of this process will be provided in the Fixed Income study section.

Commodities

Main commodity categories include:

• Precious metals
• Energy products
• Industrial metals
• Agricultural goods
• Carbon credits

Commodities trade in two main markets:

• Spot markets: physical trading of assets like gold or grain.
• Forward and futures markets: financial contracts based on commodities for future settlement.

Real Assets

Real assets primarily include real estate and other tangible investments. They:

• Generate income and tax benefits.
• Exhibit low correlation with traditional investments.
• Offer opportunities for identifying undervalued assets.

Securitization of Real Assets

This includes REITs (Real Estate Investment Trusts)—publicly traded companies that own, operate, or finance income-producing real estate. REITs are similar to Brazilian real estate funds, providing access to diversified portfolios through tradable shares.

Alongside REITs, there are Master Limited Partnerships (MLPs), which also involve securitization of real assets.

Advantages of REITs

• Professional management: eliminates the need for direct property management by investors.
• Divisibility and liquidity: REITs turn illiquid real assets into tradable units, making them easier to buy and sell.

Examples

Prologis (Ticker: PLG)

One of the largest REITs in the world, specializing in logistics properties. It manages around USD 200 billion in assets across more than 20 countries, with a 40-year track record and nearly 5,900 buildings. Its shares trade on the New York Stock Exchange and can be purchased by international investors.

Equinix (Ticker: EKX)

A REIT focused on data centers, operating in over 36 countries and 76 markets, totaling more than 272 data centers. It even has units in São Paulo and Rio de Janeiro. This REIT highlights how physical and digital infrastructures intersect within real asset investing.