Results for search of category: Real Estate

Opportunity in Alternatives

Over the last 25 years, US REITs have provided successful risk-adjusted diversification opportunities when compared with a 50/50 equity bond portfolio. Comparing them with just an equity or fixed income benchmark understates how well they do when compared with a joint benchmark. They perform far better than the other alternatives we look at – hedge funds, commodities and gold. We think the investors underuse the tactical asset allocation opportunity provided by REITs, as opposed to real estate in physical form.  [Read More... ]

The Anti-Forecast

Investors don’t need to read the outlooks for 2018 to know that they are not being adequately rewarded for holding supposedly safe assets like US Treasuries. They are effectively forced into US and international equities, because the returns generated by traditional fixed income or alternative assets are unattractive in risk-adjusted terms.  [Read More... ]

Comforting Conclusion

We are now very close to the all-time low on our index of multi-asset volatility, but setting a new record is not really important. What matters is how quickly we revert to the median and what leads us higher. Previous episodes suggest that the reversion takes 8-10 months, and is led by US High Yield and US REITs. The numbers also suggest that global equities could correct by 10-15% without significantly damaging investor psychology.  [Read More... ]

It’s Not Just Brexit

Brexit is the lazy explanation for everything that is happening in the UK. The vote is important and will be close, but other forces are at work. The commercial real estate market may be peaking. Historically this has always been a problem for the UK economy.   [Read More... ]

Difficult Question. Don’t Answer

The tactical view on equities vs bonds quickly resolves into a question about what central banks, particularly the ECB, are going to do. This is hard enough to analyse, but predicting investor reaction is even harder. We prefer to dodge the question by looking at the merits of gold and US real estate, both of which offer better risk-adjusted returns than for some time.  [Read More... ]

Three Short Notes

This week is devoted to following up some ideas we have already written about in recent weeks: the correlation of US equity and bond returns, the importance of duration in the equity market as well as the bond market, the future of US real estate finance. Three apparently unrelated ideas, and yet there is a common thread. All deal with the way in which investors will change their behaviour and their assumptions as they adapt to the end of the great Treasury bull market.  [Read More... ]

Weight Watchers

Equity markets are off to a good start this year, but Italian opinion polls and Spanish party political funding scandals suggest that there is still plenty of event risk out there. So what can a prudent investor do to trim his exposure to risk, if he is so inclined? Answer: have a look at his sector exposure and the amount of active weight relative to benchmark.  [Read More... ]

Euro-periphery: the New Emerging Market

Emerging markets are back in fashion. Our global equity models in sterling and US dollars have both increased their exposure significantly in recent weeks. But Eurozone investors don’t have the same need to invest in emerging markets, because they can buy the same risk return profile without leaving their currency bloc.  [Read More... ]

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