Thoughts on Risk number 11: Past is not a guide to future performance
The risk of a real estate fund cannot be measured using the historic series of fund returns as a number of factors will have changed including the structure, number of holdings, leverage, lease terms and the quality of the property.
However, a good starting point to estimate the risk of a fund is to apply the past drivers of returns to the current structure:, such as growth, costs, tenant rollover rates, tenant default rates, letting periods and yield changes.
At RES we estimate fund risk using the drivers of return, not the history of fund returns themselves. Contact us for more information: contact@realestatestrategies.co.uk
The risk of a real estate fund cannot be measured using the historic series of fund returns as a number of factors will have changed including the structure, number of holdings, leverage, lease terms and the quality of the property.
However, a good starting point to estimate the risk of a fund is to apply the past drivers of returns to the current structure:, such as growth, costs, tenant rollover rates, tenant default rates, letting periods and yield changes.
At RES we estimate fund risk using the drivers of return, not the history of fund returns themselves. Contact us for more information: contact@realestatestrategies.co.uk