What is a common characteristic of high-margin asset classes?

High-margin asset classes are typically characterized by stable revenue streams. This stability often arises from consistent demand for the assets and a reliable income, which is essential for achieving high profit margins. For example, properties in prime locations or those with long-term tenants tend to generate predictable cash flows, allowing for better financial planning and less volatility in earnings.

In contrast, high capital expenditures, complex operational demands, and potential for rapid depreciation can create uncertainties or additional costs that might detract from a high-margin status. While such characteristics may be present in asset classes, they do not support the fundamental notion of stable revenue generation that underpins high-margin results. Thus, stable revenue streams are crucial for high-margin asset classes, enabling them to maintain profitability over the long term.