07/02/2015 | by
Allen Kenney

Creede Murphy of American Assets Capital Advisers on REIT investment through the lens of Modern Portfolio Theory.

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In the latest episode of the NAREIT Podcast, Creede Murphy, vice president and investment analyst with American Assets Capital Advisers, discussed his firm’s research on REITs’ role in optimized investment portfolios.

Murphy said performance data show REITs have “typically” outperformed major asset classes over “just about any [long-term] time period.” REITs do have “slightly higher” volatility than stocks, according to Murphy.

However, when adjusted for risk, REITs have still outperformed the other asset classes.

What does that mean for investors and portfolio managers? Murphy said his firm’s study found that adding REITs to typical stock-bond portfolios have improved their risk-return profiles.

“What we found is the most investors are significantly underweight in REITs,” he said.

(Subscribe to the NAREIT Podcast via iTunes.)