The case behind having REITs as a distinct asset class in a Risk Parity portfolio is not looking too good so far. But what should one do instead? Here is a look at increasing allocations in other types of equities instead of allocating to REITs. Complete with backtests!
What do the experts say about REITs as a distinct asset class? I’ve expressed my own doubts in the first two posts on real estate - but what’s the take from the world of professional investors? In this post, I gather and summarize six relevant sources on the topic.
I hinted at this in my VNQ post - while I do invest in VNQ and DFREX, I am not altogether sure I should. Should I have an overweight allocation to REITs beyond what I’d get anyway in broad index funds? Are REITs a distinct asset class? Do they belong in an RP portfolio?
Although I have long invested in REITs, I’m actually undecided about whether they are a unique asset class and if they deserve an allocation in a RP portfolio going forward. That being said, Vanguard’s Real Estate ETF (VNQ) is my preferred way to invest in REITs…for now.