lol would you care to explain what may have prompted your interest in exploring this particular topic, and those particular indexes? just out of the blue I guess…
It is not. When selecting the best portfolio for an individual who owns a house you may exclude a portfolio with REIT’s, but this is not necessary correct as REIT’s provide more equity-like exposure and bring diversification benefits. So this can be helpful on the exam when you face two almost similar portfolios. A point here, a point there …
I disagree. In my country it’s normal that many persons own house or apartments. This really doesn’t make a sense unless a real estate you own is already in function of cash flow generating, thus not solely for owner living purpose. In case you own RE for renting all whatever, then we make conclude that you are exposed already to RE market. Not in case you just own a house for living.
Also, even there is many kind off REITs. You may own a house in your town and be exposed to hotel REITs on the coast.
The CFA exam is USA centric and we may complain that this is unfair but this is the reality we face. I stopped questioning the CFAI opinions and biases when I was studying for the Level II and this approach helped me to pass the test. It is not about who is right, it is all about who asnwers correctly on the test. And if the CFAI believes that REIT’s still have merits in an investment portfolio of an individual who owns a house, this will be my response on the day of the exam.
I wrote “When selecting the best portfolio for an individual who owns a house you may exclude a portfolio with REIT’s, but this is not necessary correct …” There was no period symbol after “REIT’s” in my statement.