Private Real Estate: Distinct Asset Allocation Benefits
Private real estate offers distinct asset allocation benefits and is less influenced by capital market dynamics.
Historically, previous private real estate drawdown periods have been short-lived and followed by prolonged periods of strong performance. The most recent drawdown period, fueled by aggressive Federal Reserve tightening, is showing early recovery signs, with real estate returns turning positive in 3Q24 for the first time in seven quarters, creating a compelling entry point.
Private real estate offers distinct asset allocation benefits and is less influenced by capital market dynamics.
Demographic shifts and increased digitalization are creating structural tailwinds in select real estate sectors.
The NFI-ODCE is an index of investment returns reporting on both a historical and current basis the results of 38 open-end commingled funds pursuing a core investment strategy, some of which have performance histories dating back to the 1970s. The NFI-ODCE Index is capitalization-weighted and is reported gross of fees. Measurement is time-weighted. Indices are unmanaged and an investment cannot be made directly into an index.
Risks—Investing involves risks. Some investments are riskier than others. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost. Alternative Investments are not subject to the same regulatory requirements or governmental oversight as mutual funds. The sponsor or manager of any Alternative Investment may not be registered with any governmental agency. Investors are also urged to take appropriate advice regarding any applicable legal requirements and any applicable taxation and exchange control regulations in the country of their citizenship, residence or domicile which may be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any Alternative Investment. Alternative investments often engage in leverage and other investment practices that are extremely speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the loss of the entire amount that is invested. Private investments are subject to liquidity risk which constitute illiquid investments for which there is not, and will likely not be, a secondary market at any time prior to a public offering and listing of our shares on a national securities exchange.
Investing in real estate poses certain risks related to overall and specific economic conditions, as well as risks related to individual property, credit, and interest rate fluctuations. Investing in real estate may involve additional risks due to its narrow focus; is nondiversified, so a loss resulting from a particular security or sector will have a greater impact on an investment’s return; invests in derivative securities, which may carry market, credit, and liquidity risks; and invests in foreign securities, which are subject to currency fluctuation and political uncertainty. These risks may increase an investment’s share price volatility. Investment strategies such as diversification and asset allocation do not guarantee a profit or protect against loss in declining markets.
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