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.”
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Period Ending 2008 Q4, Years |
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5 |
10 |
15 |
20 |
25 |
30 |
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Apartments |
Ave. Compounded return, % |
12.5 |
11.64 |
11.85 |
20.06 |
10.19 |
11.72 |
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Sharpe Ratio |
1.27 |
1.45 |
1.64 |
0.72 |
0.64 |
0.71 |
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Industrial |
Ave. Compounded return, % |
13.54 |
11.98 |
11.93 |
9.25 |
9.66 |
10.56 |
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Sharpe Ratio |
1.51 |
1.45 |
1.32 |
0.44 |
0.43 |
0.47 |
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Office |
Ave. Compounded return, % |
14.64 |
11.85 |
11.44 |
7.8 |
7.89 |
9.7 |
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Sharpe Ratio |
1.45 |
1.07 |
0.85 |
0.19 |
0.13 |
0.24 |
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Retail |
Ave. Compounded return, % |
15.58 |
13 |
10.9 |
9.4 |
10.34 |
10.39 |
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Sharpe Ratio |
1.66 |
1.33 |
0.85 |
0.47 |
0.55 |
0.45 |
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Hotels |
Ave. Compounded return, % |
14.38 |
10.36 |
13.37 |
10.56 |
9.3 |
NA |
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Sharpe Ratio |
1.25 |
0.7 |
0.84 |
0.45 |
0.26 |
NA |
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Total |
Ave. Compounded return, % |
14.1 |
11.92 |
11.21 |
8.68 |
9.07 |
10.18 |
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Sharpe Ratio |
1.61 |
1.37 |
1.11 |
0.36 |
0.35 |
0.4 |
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- 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).