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Portfolio Optimizer

Whether your goal is to reduce risk or increase returns, REITs deliver

NAREIT's Real Estate Portfolio Optimizer enables investors to compare the returns, volatility and Sharpe ratio (risk-adjusted return) of different real estate portfolios. It calculates the actual portfolio performance on the basis of more than 176,000 possible combinations of portfolio allocations to publicly traded REITs and private equity core, value-added, and opportunistic funds.

Real estate portfolios that are too heavily concentrated in private equity real estate lack the diversification benefits that a more effective balance of public and private market real estate provides. Consequently, portfolios concentrated in private equity real estate funds have exhibited a sub-optimal risk /return profile. Putting approximately one-third of real estate in publicly traded REITs delivers better risk-adjusted returns for investors that traditionally rely on private real estate.
 
How the Real Estate Portfolio Optimizer Results are Calculated
REIT.com Video: The Case for a Diversified Real Estate Portfolio
NAREIT economist Brad Case discusses the portfolio optimizer and the reasons for blending public and private real estate in institutional portfolios.
 
Research: REITs and Private Equity Real Estate Funds in Institutional Portfolios
  • REITs: Real Estate With a Return Premium
    A NAREIT analysis of the performance of publicly traded equity REITs and private equity core, value-added and opportunistic funds over the last full real estate cycle shows REITs outperformed private equity real estate funds over the entire cycle, as well as over the bull market portion of the cycle when value-added and opportunistic funds’ higher leverage would have been expected to deliver superior returns.
  • The Truth About Real Estate Allocations
    This analysis from investment management firm Cohen & Steers reviews the performance of publicly traded REITs and core, value-added and opportunistic private equity real estate funds over various periods on a net-of-expenses basis. The paper explores the possible reasons for REITs' outperformance, based on the comparative business models of REITs and private equity real estate funds.
 
Additional Research and Resources
In the News