NAOIP: Real Estate Emerges as the Fourth Asset Class

BEFORE 1980, COMMERCIAL real estate was invisible in institutional

investment portfolios. More recently considered an “alternative

investment,” today’s institutional investors typically allocate an average

of almost 10 percent of their portfolios to real estate, which continues

to gain a foothold among limited partners, with enduring implications

for the industry. Has real estate joined the big three institutional

asset classes — stocks, bonds and cash — as a permanent fourth asset

class?

The Standard & Poor’s Dow Jones Indices recently concluded that real

estate is due an upgrade and will elevate it from a subsector under

“financials” to one of 11 sectors within its Global Industry Classification

Standard (GICS), effective with the market close on August 31, 2016.