Real estate is a significant element in the portfolios of large European institutional investors, with allocations making up as much as 10 percent of the average portfolio. The purported benefits of the inclusion of real estate in institutional investor portfolios are well known; the asset class should provide diversity to the traditional equity/fixed income blends which continue to provide the backbone of nearly all portfolios. Where real estate is one diversifying element, hedge funds, private equity, and infrastructure are also advertised as being able to provide diversity to portfolios. How has real estate performed relative to other asset classes?
CEM Benchmarking is in a unique position to provide insight into the historical record on investment allocations, returns and risk of large European institutional investors. With a robust set of large European funds that spans 12 years – a full investment cycle – real estate performance can be compared to other asset classes across different periods on an apples-to-apples basis.