Portfolio Diversification & Realty Funds

Posted on: Wednesday, May 23rd, 2012
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Diversification is one of the best ways to mitigate risk and realty sector offers innumerable opportunities for both growth and income investors seeking attractive returns outside the stock market. Realty asset class acts as a bridge to reduce reliance on equities and bring more exposure to long-lasting fixed income in a portfolio.

 Real Estate Market

The current demand for real estate and its ability to hedge inflation makes it an appropriate investment for a diversified portfolio. Industry experts opine that the continued efficiency in real estate market combined with global investment opportunities provide greater motive for inclusion of real estate in one’s overall capital allocation. Thus, investors with high and moderate risk appetites, through realty investments, can achieve long-term financial goals.

Real Estate Funds

Though, property returns are mostly stable, real estate sector still bears a certain amount of market risk mirroring the ups and downs of the overall economy and is influenced by changes in interest rates and the credit markets. However, novel products like real estate funds allow investors to diversify their portfolio with exposure to realty, without directly investing large capital in a project. Another benefit of investing through a fund is that it is managed by professionals with deep market knowledge and experience and as the fund invests across various regions, the investment carries minimal risk.

Stabilized Portfolio

The emergence of real estate funds offers investors an option to create a potentially high-performing, tax-efficient and a diversified investment portfolio. Different realty funds concentrate on different regions, cities and ventures and investors can select a specific fund based on its past performance and feasibility of achieving its targets.

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