RESEARCH CENTER >> REAL ESTATE ESSENTIALS:
EVALUATING RISK AND INVESTMENT RETURNS
Often referred to as the fourth asset class, real estate can serve as an important component to improve performance while dampening volatility. Non-traded REIT shares are not the equivalent of directly owned real estate, however, when evaluating real estate as an asset class, some characteristics are similar. Directly owned real estate demonstrates little or no correlation with other asset classes, making it a positive inclusion in an investment portfolio.
Historically, incorporating real estate into an investment strategy has provided benefits such as:
- Income – historically 100-200 basis points over 10-year Treasuries.
- Reduced overall portfolio riskspan.
- Reduced volatility.
- Strong Total Returns – 12.1% average annual return vs. 10.6% for the S&P 500 over the past 10 years.