For Income and Diversification, Try Private Equity Real Estate Funds

For Income and Diversification, Try Private Equity Real Estate Funds

WealthManagement.com recently featured Legg Mason’s Tom Hoops on the broadening availability and potential benefits of investing in private equity real estate funds.



Investing in U.S. and global real estate previously meant investing in the actual properties—a prospect mostly available to institutional and accredited investors. Today, the asset class is becoming more broadly available to high-net-worth individuals through new private equity funds.

While requiring a long-term commitment from investors, these funds seek to capitalize on favorable real estate market conditions, with some featuring monthly or quarterly liquidity.

There are five primary reasons to consider private equity real estate funds:

  • Attractive risk-adjusted returns
  • High income potential, with inflation hedges
  • Diversification in mixed-asset portfolios
  • Deeper, more liquid markets
  • Favorable fundamentals

Read the full article on the potential of private equity real estate


Commercial Real Estate: History of Solid Returns with Low Volatility

20-year average annual returns and standard deviation

Private Equity Real Estate Returns

Source: Bloomberg, as of 9/30/2017. Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent an actual investment. Unmanaged index returns do not reflect any fees, expenses or sales charges. Indexes are unmanaged and investors cannot invest directly in an index.

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IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

The opinions and views expressed herein are not intended to be relied upon as a prediction or forecast of actual future events or performance, guarantee of future results, recommendations or advice.  Statements made in this material are not intended as buy or sell recommendations of any securities. Forward-looking statements are subject to uncertainties that could cause actual developments and results to differ materially from the expectations expressed. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed. Information and opinions expressed by either Legg Mason or its affiliates are current as at the date indicated, are subject to change without notice, and do not  take into account the particular investment objectives, financial situation or needs of individual investors.

Diversification does not guarantee a profit or protect against loss.

Outperformance does not imply positive results.

Yields and dividends represent past performance and there is no guarantee they will continue to be paid.

Active management does not ensure gains or protect against market declines.

Forecasts are inherently limited and should not be relied upon as indicators of actual or future performance.