Stocks, Bonds, and Real Estate Asset Volatility and Performance Comparison
Stability vs. Returns
Savvy investors know that diversification is key to overall portfolio performance. Recent economic
headlines on inflation, interest rates, and bank instability have led many individuals to pull back from new investments. Historical data shows us that those who seek out stable investment opportunities in uncertain market conditions — such as multifamily real estate — experience less volatility and greater long-term growth potential.
Volatility Comparison
Publicly traded investments tend to have more risk
By comparing annual returns since 2000 across stocks (S&P 500), bonds (Bloomberg Agg.), public real estate trusts (NAREIT), private commercial real estate (NCREIF), and multifamily real estate (CoStar Multifamily), it’s clear that some are more volatile than others. While stocks and publicly traded REITs do boast some of the highest historical highs, they also experienced the most extreme losses during the Great Recession and saw significant volatility throughout the past 20+ years.
Multifamily real estate investments offer less volatility than stocks and REITs, are not correlated to the stock market, and offered better annual returns than bonds in all but two years since 2000.
Performance Comparison
Comparing $10,000 investment performance
If you compare the performance of a $10,000 investment made in the year 2000 over time, you can see that the growth in multifamily outperforms other asset types, while offering greater stability than typical stocks or REITs.
Most investors will benefit from a diverse portfolio with a mix of high-growth and stable investment types. If private multifamily investments aren’t part of your asset mix, it might be time to revisit your strategies.
SOURCES:
“CoStar”
“REIT Data.” Nareit, May 8, 2023. https://www.reit.com/data-research.
“S&P 500 Historical Annual Returns.” MacroTrends. Accessed May 5, 2023. https://www.macrotrends.net/2526/sp-500-historical-annual-returns.
Thompson, Michael. “Bloomberg US Aggregate Bonds Annual Returns.” UpMyInterest. Accessed May 5, 2023. https://www.upmyinterest.com/bloomberg-us-aggregate-bonds/.
“U.S. NCREIF Property Index Returns 2022.” Statista, February 23, 2023.
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Current Investment Opportunities
Investment opportunities for new multifamily projects are now open.