How can we concile these two statements? “Real estate markets follow economic cycles.” “Real estate historically been viewed as an important diversifier.”
OK! Ignore this question. I guess I understood. RE Follows economic cycles but reacts differently than stocks and bonds. And there are different RE sectors with differing rsik and return profiles.
just remember that RE will give a much lower return than eq/bond … but bec of its diversification effects it has a higher sharpe ratio.
bips Wrote: ------------------------------------------------------- > just remember that RE will give a much lower > return than eq/bond … but bec of its > diversification effects it has a higher sharpe > ratio. wrong REIT has return on par with S&P and better risk AFAIK
Real estate differentiate direct and indirect investments. Also sectors do matter. Different return and risk characteristics for different segments and they do compare differently with stock and bonds. Too complicated…
comp_sci_kid Wrote: ------------------------------------------------------- > wrong REIT has return on par with S&P and better > risk AFAIK “better risk” means “better diversification benefit”, right? I won’t say REIT has lower SD. - sticky
AFAIK ?
AFAIK = as far as i know I believe REITS Unhedged has like ~12% std almost on par with S&P I will need some one with books to confirm. One thing i know that direct investments in RE have higher risks, lower return and low correlation with both S&P and bonds and are better for inflation protection then REITs