Filling the basket: From sector-specific to diversified strategies, investors have a variety of options for approaching real estate investment
The wise soul who once said, “Don’t put all your eggs in one basket,” was probably unfamiliar with the complexities of the real estate investment market. Although that age-old proverb may resonate more with institutional investors pursuing a diversified investment strategy, those following a sector-specific strategy reject that sentiment — in a manner of speaking. Or perhaps it might be better to say they want to choose which baskets to fill, rather than leaving diversification up to their investment managers.
Experts say investors’ decision to follow a diversified strategy versus sector-specific strategy depends on many differentiators, such as the size of the investor organization, risk/return appetite and desired portfolio weightings, to name a few. Amid the many nuances of the real estate market, one thing is clear: Different things work for different investors, and one size does not fit all. Better questions might be, what works well for which investors, and wh