Is Global Real Estate a Part of Your Investment Portfolio?
Global Real Estate Funds give investors access to some of the best real estate in the world. From New York to Paris to Singapore and places in between, the funds invest primarily in real estate companies many of which own properties that provide stable and recurring rental income streams. These properties typically attract high-quality tenants, providing an added level of security.
When evaluating real estate, prices are often more influenced by local factors than are other types of assets and therefore what is happening in one region will not necessarily impact what happens in another region. Factors that affect real estate values and rental rates in downtown London, for example, may have minimal impact on real estate in Tokyo.
In addition to real estate markets moving independently of each other, real estate as a whole also tends to move independently of other types of assets and may be viewed as a separate asset class. Real estate possesses characteristics that make it worthwhile to incorporate within a diversified portfolio.
Reasons to own A Global Real Estate Fund
- Real estate markets operate independently – Real estate is a local business and real estate cycles in different countries are often unrelated
- Real estate is a hard asset – The value of the underlying assets of the companies invested in represents tangible assets typically supported by a recurring rental revenue income stream. An investor can gain some sense of security based on the value and yield of the underlying real estate, which supports the value of the companies invested in.
- Inflation-hedging characteristics – Although real estate values may be negatively impacted by rising interest rates associated with an increase in inflation, real estate also offers investors a potential hedge against inflation
- Strong cash flows – Given their regulatory structure, the majority of real estate income trust securities must meet strict distribution requirements to maintain their tax advantaged status.