While institutional allocations to private real estate have been rising globally, many plan sponsors and advisers grapple with the question of how they should develop a robust implementation strategy for their private real estate buckets.

Plan sponsors and advisers are encouraged to view their manager selection implementation plan in conjunction with asset allocation decisions between core and non-core risk categories. There are a number of considerations that have to be taken into account. These include how a late-cycle tilt towards core could make sense today and how the dispersion of manager returns has historically been significantly narrower in core private real estate markets. Both insights offer a relevant roadmap for better positioning portfolios in today’s changing market landscape.

Right sizing the mix of core vs non-core

In the absence of portfolio constraints, a balanced 70/30 core/non-core real estate asset allocation offers plan