From a small northwestern observatory…

Finance and economics generally focused on real estate

ACCRE LLC Report, December, 2020

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Let’s all start by admitting that the S&P 500 has been on a tear this year. If you had put a dollar in an S&P Index Fund on March 31, it would have been worth $$1.38 when you sang Aude Lang Sine last week. Personally, I hope it keeps going! ACCRE is designed in no small part to hold value during market swings, to outperform REITs in general, and to attenuate a well-diversified portfolio. It did all of those this year, and particularly in December. Let’s get down to the basics.

I use January 31 as a benchmark date — that was nominally the beginning of the COVID bear market. As you can see (below) ACCRE did very well compared both to the broad market and to the S&P Property Index. Indeed, but for some market reversals in the fall, we’d be well ahead today. December was a great month for us, and we’re back in the lead against both benchmarks. A dollar invested in ACCRE at the inception would be worth $1.65 today, compared to $1.59 for that same dollar in the S&P 500 and $1.19 in the Property Index.

We feel like we’re well positioned for the coming year, and in fact we were up on the first day of trading, today, while the main market indices all tanked.

One important measure is our Sharpes Index, which looks at excess returns (returns in excess of what we would have earned in treasury bills) adjusted for risk (volatility — measured by the standard deviation of those returns). An additional measure is the correlation with the S&P 500. We generally measure this over the life of the fund, and it hovers around +50%, which is where we want it to be. However, in December, this hit about +15%, suggesting that the market may be looking at real estate very differently from other securities.

S&P 500
Average Daily Excess Return0.0424%
Standard Deviation1.3215%
Sharpes Ratio3.2034%
ACCRE Fund
Average Daily Excess Return0.0448%
Standard Deviation1.1975%
Sharpes Ratio3.7398%
Correlation (overall)52.3091%
Correlation (December)14.6899%
ACCRE Metrics as of December 31, 2020

Well-curated real estate continues to be viewed as a safe haven, with very real value opportunities when and as this recession is over. As always, this in no way constitutes investment advice, and your own financial investments should be made in consultation with appropriate advisors.

If we can answer any other questions, or be of any assistance, please let us know.

John A. Kilpatrick, Ph.D. — john@greenfieldadvisors.com

Written by johnkilpatrick

January 4, 2021 at 3:24 pm

Posted in Uncategorized

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