“If you don’t know where you are going, you might wind up someplace else."
“Ultimately, what drives performance may not be what drives capital." That's the conclusion of a new paper on real estate mutual funds, and it should unsettle anyone who assumes capital allocation is a rational sorting mechanism.
Institutional and retail investors both aspire to own real estate, seeking consistent returns that, at least to an extent, are decoupled from the performance of other asset types. One would think that investors would pick from a set of opportunities - direct investment, small private funds, institutional vehicles or public mutual funds and REITs - and optimize for performance. But what actually happens is much more complicated, according to a new study.1
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