Reits predicted to lower overall volatility of property market

CONFERENCE

The arrival of real estate investment trusts (Reits) will provide an asset class with a low correlat...

The arrival of real estate investment trusts (Reits) will provide an asset class with a low correlation to equities and bonds, according to Scottish Widows Investment Partnership (Swip). The group's head of European equities Nigel Bolton said in the US, Reits produced a correlation of just 0.27 with the S&P 500 between 1992 and 2004, and just 0.05 with the long bond during the same period. He quoted research by Ibbotson Associates in the US carried out during 1972-2004, which suggests the higher the level of Reits, up to 20%, in a diversified portfolio of stocks, corporate bonds and Trea...