Optimal Portfolio Allocation Includes Real Estate Investments
In Larry Fink’s recent annual chairman’s letter to investors, he highlighted the importance of private markets in BlackRock’s long-term strategy and proposed an alternative to the traditional 60/40 portfolio.
“The future standard portfolio may look more like 50/30/20—stocks, bonds, and private assets like real estate, infrastructure, and private credit,” Fink wrote, and because portfolio allocation is one of our favorite discussions at Capital Square, we wanted to continue the conversation.
We’ve analyzed the Yale Endowment Model, and we’ve written white papers on “Why Real Estate is an Essential Component of Portfolio Allocation.”
In short, as Larry Fink points out, the data verifies that superior portfolios include real estate.
Insights from Capital Square’s Leadership
- “Financial advisors are coming around to what we’ve always known. Adding real estate investments to an investor’s portfolio increases returns and reduces risk. The stats back it up.” — Louis Rogers, founder and co-CEO, Capital Square
- “Following the lead of endowments and institutions, retail investors are looking for greater diversification than the traditional equity and fixed income products can provide. Investing in real estate and other hard assets makes logical sense to reduce the long-term impact of volatility.” — Drew Jackson, Chief Distribution Officer, Capital Square
- “If your goal is to grow AUM, grow referrals, and retain client assets, using private real estate is no longer just an optional strategy. It’s a requirement.” — Jessica Correnti, CFP ®, Senior Vice President, National Accounts, Capital Square
- “An increased allocation to non-correlated alternatives, like private real estate has historically reduced risk and increased returns in a client portfolio. This strategy closely aligns with institutional investing.” — Albert Thompson, Vice President, National Accounts, Capital Square
- “I think this is a long time coming especially now that alternatives are getting more eyes looking at them.” — Mark Mercado, Executive Vice President, Investment Programs & Operations, Capital Square
Investing in real estate can mean an array of possibilities, each designed for different investor goals and preferences. Returns-oriented investors can invest solely in development funds; tax-conscience investors can invest in DSTs and qualified opportunity zone funds; investors looking to diversify risk with a steady dividend can invest in a REIT.
Capital Square’s unique value chain allows for each of these real estate investment vehicles, which enables investors to remain with Capital Square for an asset’s entire life cycle, reducing transaction costs and maximizing investor return potential.
So, in short, what is our team’s reaction to the recently increased conversations about including real estate within an optimal investment portfolio? We’re ready for it.
Connect today to continue the conversation.
Disclosure: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Private placements are speculative and illiquid. Diversification does not guarantee profits or protect against losses.
