Conclusions
With the U.S. representing less than half of the available universe of globally listed property stocks, focusing on U.S. REITs alone can be viewed as a restrictive and undiversified approach to asset allocation. Taking a global approach to property investing may reduce risk through increased diversification, while providing similar investment characteristics to U.S. REITs, such as high current income generation and the potential for long-term capital appreciation. The choice of a global property benchmark is also key, as the use of a REIT-only index can be highly limiting from a geographical diversification standpoint.
To learn more about the evolution of global real estate securities, their investment characteristics, and their historical impact on portfolio risk/return characteristics, please see our paper, Considerations for a Global Appraoch to Property Investing.
This article was written by Michael Orzano, director, global equity indices, S&P Dow Jones Indices.
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