Can Reits Play a Strategic Role in Long-Term Wealth Maximization?
affiliation not provided to SSRN
October 12, 2010
Journal of Investment Consulting, Vol. 11, No. 1, pp. 29-36, 2010
Despite the growing importance of real estate investment trusts (REITs) in retirement-focused investment products, little exists in the literature on their role in long-term retirement wealth creation. No consensus has been reached as to whether REITs should be included as an alternative strategic source of retirement wealth creation. This study examines their role in the context of life cycle investing over two time periods: 1972–2006 and 1972–2009. The incremental impact on both risk and return are examined to assess whether REITs improve the investment opportunity set over a range of life cycle investment portfolios. The findings are somewhat surprising and inform pension fund managers, policy makers, and investors about the diversification benefits of REITs in retirement portfolios.
Keywords: REIT, real estate investment trust, diversification benefit
JEL Classification: E21, G11, G23Accepted Paper Series
Date posted: November 3, 2010
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