From a small northwestern observatory…

Finance and economics generally focused on real estate

ACCRE LLC Report, January, 2021

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Well, wasn’t THAT an interesting month! In times of market turmoil, investors often turn to real estate as a safe haven, and we certainly saw that happen in January. The overall S&P was down a bit but the volatility continues to be noteworthy. As such, ACCRE did quite well compared to both the overall market (S&P 500) and the global real estate in general (S&P Global Property Index). We’ve had two very nice months in ACCRE, and hope to see that trend continue in the new year.

Unquestionably, the S&P had a better 2020, but is off to a comparatively lackluster start in 2021. We hope for the best, of course, but it’s important to note that one reason for ACCRE is to provide diversification in an otherwise healthy portfolio. It continues to do that, and continues to provide above-average risk adjusted returns. The overall correlation between ACCRE and the S&P is a bit higher than last month, but continues to be much lower than the historical average.

S&P 500
Average Daily Excess Return0.0405%
Standard Deviation1.3203%
Sharpes Ratio3.0710%
Average Daily Excess Return0.0485%
Standard Deviation1.1922%
Sharpes Ratio4.0651%
Overall Correlation (life of fund)51.9201%
Correlation (monthly)21.4110%
ACCRE Metrics as of January 31, 2021

Again, for the uninitiated, the Average Daily Excess Return is the daily return minus the return that would have been earned in a risk-free asset (here, the coupon-equivalent 13-week T-Bill, measured daily). The Sharpes Ratio is the ratio of those excess daily returns to the standard deviation of those returns (the measure of volatility) and serves as a proxy for risk-adjusted returns. ACCRE usually has higher excess returns and almost always has lower volatility, hence a higher risk-adjusted returns.

Best wishes to you all, and if I can answer any of your questions on REITs or real estate strategies, please drop me a line.

Written by johnkilpatrick

February 2, 2021 at 2:28 pm

Posted in Uncategorized

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