PT  - JOURNAL ARTICLE
AU  - Susan Hudson-Wilson
AU  - Frank J. Fabozzi
AU  - Jacques N. Gordon
TI  - Why Real Estate?
AID  - 10.3905/jpm.2003.319902
DP  - 2003 Aug 31
TA  - The Journal of Portfolio Management
PG  - 12--25
VI  - 29
IP  - 5
4099  - https://pm-research.com/content/29/5/12.short
4100  - https://pm-research.com/content/29/5/12.full
AB  - In the beginning real estate was regarded as a diversifier, bolstered by the Employee Retirement Security Act of 1974. However, given real estate's nature as a debt-equity hybrid and the emergence of new ways to invest in real estate markets, it is clear that there could be additional motivations for choosing to include real estate in a mixed asset portfolio. This article explores 5 possible uses for real estate: to reduce overall portfolio risk, to achieve high absolute returns, to hedge unexpected inflation or deflation, to reflect the overall investment universe and/or to deliver strong cash flows to the investor. But first we must re-define real estate to encompass the new public debt and equity markets that have joined the traditional private debt and equity markets for real estate. A new index of overall real estate performance is presented. The article concludes by considering the types of investors who might see a role for real estate; several classes of investor would likely benefit from the inclusion of real estate in their investment portfolio.