Alt. Invmt: Real Estate

Investors can diversify their direct real estate holdings through all of the following vehicles EXCEPT: A) commingled funds. B) limited partnerships. C) real estate investment trusts (REITs). D) co-operative shares. Your answer: C was incorrect. The correct answer was D) co-operative shares. Real estate co-operatives are generally a tool with which multiple owners can purchase shares in a single building or complex. This strategy spreads out risk among many investors but doesn’t offer much in the way of diversification for a single investor. Commingled funds, limited partnerships, and REITs typically allow investors to spread their bets either geographically or through different property types. But REITs have almost perfect correlation with the S&P 500 ? How would that provide “diversification”… and … i just realized I SUCK at Altern Inv maybe cuz i’ve restricted to Schweser… perhaps i should delve into the CFAI notes too…

Thanks for the insight… it is clear they are not talking about general diversification. Only diversifying within real estate.

Ah… they speak of diversifying “real estate holdings” … not in general. So much for attentive reading. Thanks. I don’t think I’ll get by this way … scored a pathetic 50% on a Basic-Inter level 12Q test Srsly… i could use some opinion… are Schweser notes terribly “inadequate” for Alternative Investments ?