October 3, 2017
Much of the asset allocation work in relation to institutional commercial real estate centers on the assumption that it is either a private market equity allocation or, for investors with a greater liquidity focus, an allocation to listed market equities such as REITs. There is much less available research seeking the performance and risk implications of portfolios composed of both. The same is true of private and listed debt strategies.
Increasingly, however, we see portfolios that need both the incremental return of private markets and the potential for liquidity of listed markets. For example, defined contribution pension plans in the UK and US are required to provide liquidity on a daily or monthly basis. This creates a need for real estate portfolios to include at least a modicum of listed market exposure.