What Role do REITs Play in 401(k) Plans?
Most 401(k) plans offer a variety of stock and bond investment options. However, real estate is largely not accessible in most of today’s defined contribution plans. Real estate stocks’ competitive rates of return, stable levels of risk, and low correlation with the investment returns of other stocks and bonds offer significant diversification benefits to a multi-asset portfolio. Participants and sponsors should make sure that their 401(k) plans include real estate–one of the strongest sources of portfolio diversification–among their investment choices. Historically, institutional investors have invested in broadly diversified portfolios of multiple investments, meeting their plan liabilities while controlling the risk of catastrophic losses in any one year. Individual investors may not understand the importance of this investment concept. NAREIT commissioned Ibbotson Associates–a leading authority on asset allocation–to examine the historical investment performance of the publicly tra
Most 401(k) plans offer a variety of stock and bond investment options. However, real estate is largely non-existent in most of today’s defined contribution plans. Real estate stocks’ competitive rates of return, stable levels of risk, and low correlation with the investment returns of other stocks and bonds offer significant diversification benefits to a multi-asset portfolio. Participants and sponsors should make sure that their 401(k) plans include real estateone of the strongest sources of portfolio diversificationamong their investment choices. Historically, institutional investors have invested in broadly diversified portfolios of multiple investments, meeting their plan liabilities while controlling the risk of catastrophic losses in any one year. Individual investors may not understand the importance of this investment concept.Ibbotson Associates – a leading authority on asset allocationexamined the historical investment performance of the publicly traded equities of real es
