30 years of research shows apartments have the best track record for risk-adjusted returns
In its review of 30 years of data, Torto Wheaton Research recently reported to the National Multi-Housing Council that apartments “…have proven to be most resilient during economic downturns, delivering superior returns during recessionary periods.”
Period Ending 2008 Q4, Years | |||||||
5 | 10 | 15 | 20 | 25 | 30 | ||
Apartments | Ave. Compounded return, % | 12.5 | 11.64 | 11.85 | 20.06 | 10.19 | 11.72 |
Sharpe Ratio | 1.27 | 1.45 | 1.64 | 0.72 | 0.64 | 0.71 | |
Industrial | Ave. Compounded return, % | 13.54 | 11.98 | 11.93 | 9.25 | 9.66 | 10.56 |
Sharpe Ratio | 1.51 | 1.45 | 1.32 | 0.44 | 0.43 | 0.47 | |
Office | Ave. Compounded return, % | 14.64 | 11.85 | 11.44 | 7.8 | 7.89 | 9.7 |
Sharpe Ratio | 1.45 | 1.07 | 0.85 | 0.19 | 0.13 | 0.24 | |
Retail | Ave. Compounded return, % | 15.58 | 13 | 10.9 | 9.4 | 10.34 | 10.39 |
Sharpe Ratio | 1.66 | 1.33 | 0.85 | 0.47 | 0.55 | 0.45 | |
Hotels | Ave. Compounded return, % | 14.38 | 10.36 | 13.37 | 10.56 | 9.3 | NA |
Sharpe Ratio | 1.25 | 0.7 | 0.84 | 0.45 | 0.26 | NA | |
Total | Ave. Compounded return, % | 14.1 | 11.92 | 11.21 | 8.68 | 9.07 | 10.18 |
Sharpe Ratio | 1.61 | 1.37 | 1.11 | 0.36 | 0.35 | 0.4 | |
- Sharpe Ratio = Period Average (Compounded Return – 10-year Treasury Bond) / Period
- Standard Deviation (Compounded Return – 10-Year Treasury Bond)
- Grey color highlights the highest return; green color highlights the highest ratio of average annualized return to standard deviation
Data: National Council of Real Estate Investment Fiduciaries and Torto Wheaton Research (TWR) From the report: “A Case for Investing in U.S. Apartments” prepared by TWR for the National Multi-Housing Council (March, 2009).