Bar chart showing the 1-year and annualized 15-year returns for the NCREIF Property Index, NAREIT All Equity REITs Index, and the S&P 500 Index as of September 2023. Private real estate (NCREIF Property) has underperformed over the one-year timeframe and achieved equity-like returns over the past 15 years.
Sources: Bloomberg, National Council of Real Estate Investment Fiduciaries (NCREIF), and Wells Fargo Investment Institute, as of September 30, 2023. For illustrative purposes only. NCREIF Property Index is a composite total return for private commercial real estate properties held for investment purposes only. NAREIT All Equity REIT Index is considered representative of the equity REIT market. S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. Index returns do not represent investment performance or the results of actual trading. Index returns reflect general market results, assume the reinvestment of dividends and other distributions, and do not reflect deduction for fees, expenses or taxes applicable to an actual investment. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.
Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. Private real assets are not appropriate for all investors. REITS have special risks, including the possible illiquidity of the underlying properties, credit risk, interest rate fluctuations, and the impact of varied economic conditions
Key Takeaways
- Despite difficult current conditions, private real assets have returned mid-single digits over a full market cycle, offering diversification through non-correlated return streams.
- Private Real Estate (a sub-strategy of private real assets) features various strategies with differing risk-return profiles. At this point in the cycle, higher interest rates and slowing growth have increased risks and weighed on recent returns.