Institutional investors have been focused on real estate since the early 1970s, a time when many factors converged that compelled institutional investors, particularly pension funds, to begin investing in the asset class. The first real estate commingled fund was offered in 1968, and with the passage of ERISA in the United States in 1974, pension investors mandated diversification across asset classes…
Can a price be put on the pleasure of enjoying a mild winter’s day? To answer this question, we turned to residential real estate prices, as a measure of how much people were willing to pay to live in a sunnier location…
Residential real estate equity is one of the largest asset classes in the United States and is a significant proportion of the average household’s net worth. We study how diversified real estate indices lead to a dramatic understatement of the median homeowner’s portfolio risk (by a factor of 4-5x). Finally, we explore the value of an investable and diversified residential real estate index from the perspective of an institutional investor.
With over $71 trillion USD in assets under management, institutional investment is a core driver of the global economy. Institutional entities have the common objective of generating cash flows capable of fulfilling future obligations. These obligations fluctuate with respect to economic factors such as interest rates, inflation, and unemployment rates. In addition, the compounding nature of investment returns means that significantly more capital is required to fulfill a short-term obligation in comparison to a longer term one.
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