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
Commercial Real Estate: History of Solid Returns with Low Volatility
20-year average annual returns and standard deviation
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.