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Research Insight - A Liquid Benchmark for Private Real Estate

categories: Indexes, Americas, EMEAI, Investing (Investment Management), Performance Analysis, Portfolio Construction and Optimization, Asia Pacific, Asset Owners, Hedge Funds, Equities, Australia, Fixed Income, Multi-Asset Class, Asset Pricing and Valuation, Research Paper, KOUZMENKO Roman, Asset Managers (Quant or Fundamental), Banks, Research Insight, general

Commercial real estate represents an important element of the asset allocation process but is difficult to access directly, with high barriers to entry and exit. Listed (or publicly held) real estate is far more liquid but these securities are far more volatile and incorporate an additional layer of leverage. Indexes tracking direct and listed real estate differ significantly in their calculation methodologies, making direct comparisons difficult. The MSCI USA IMI Liquid Real Estate Index seeks to provide the best of both worlds: an investable index with a risk and return profile of direct real estate and the liquidity of listed real estate.

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