While many investors want to include real estate in their portfolios, they often assume private real estate funds are their best option. According to CEM benchmarking and NAREIT, this is certainly not the case. Over the 20 year period from 1998 to 2017, REITs out-performed private real estate funds on both a nominal and a risk-adjusted basis. For investors including real estate in their asset allocation framework, REITs deserve a seat at the table.
Source: Nareit | Repost Serenity Alts 11/6/19
CEM Benchmarking’s 2019 study, sponsored by Nareit, provides a comprehensive look at realized investment performance across asset classes over a 20-year period (1998-2017) using a unique dataset covering over 200 public and private sector pensions with nearly $3.8 trillion in combined assets under management. One of the unique benefits of the CEM dataset is that it provides the actual realized performance of the assets chosen by plan managers and trustees.
The study compares gross and net average annual total returns as well as correlations and volatilities for 12 asset classes with appropriate adjustments for reporting lags associated with illiquid asset classes (unlisted real estate and private equity).
The 2019 study also compares the performance of different styles of unlisted real estate including internally managed, core, value added/opportunistic and fund of funds.