Case Studies - August 27, 2024

An Empirical Study: Real Estate Portfolio Diversification

August 27, 2024

EQUITYMULTIPLE Staff
By EQUITYMULTIPLE Staff

An Empirical Study: Real Estate Portfolio Diversification

Diversifying into illiquid alternative asset classes, such as private-market real estate, is a hallmark of modern portfolio theory — a strategy generally employed by institutional investors. EquityMultiple has made this strategy more accessible for individual investors, with the basic premise being that adding less cross-correlated assets to your portfolio can potentially reduce volatility and enhance risk-adjusted returns over time.

There is also the matter of diversification within asset classes. Diversification within an asset class may also to balance objectives, giving you the best shot at pursuing income and upside while maintaining an acceptable level of risk. Diversification within an asset class, simply put, also helps to avoid an “all eggs in one basket” outcome. Avoiding overexposure to a single asset helps keep one bad bet from tanking your overall portfolio performance.

Let’s bring this all home with some tangible examples. How has diversification played out within the EquityMultiple investor network? What type of results have investors seen through diversification?

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EQUITYMULTIPLE Staff
EQUITYMULTIPLE Staff
EquityMultiple's team features real estate industry veterans, technology-driven analysts, and dedicated armchair economists.

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