Abstract
Direct energy investments should be evaluated as a distinct asset class. Producing oil and gas properties have unique characteristics that are not directly available through traditional investment vehicles such as stocks and bonds. Direct energy investment should be attractive to investors by virtue of its relatively low correlation with the traditional asset classes. It may also appeal to a broader audience as a hedge against inflation, allowing investors to maintain real purchasing power and protect against future nominal increases in the overall domestic price level. The potentially significant diversification benefits of direct energy investments establish them as a viable asset class to be considered in a long-term asset allocation policy.
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