Housing in a Strategic Asset Allocation: Should Institutional Investors Be Interested in Housing Futures?

Greg MacKinnon

Journal of Real Estate Portfolio Management, 2008, vol. 14, issue 3, 211-222

Abstract: Executive Summary. Derivatives based on housing allow investors to make synthetic allocations to housing in their portfolios. Investors’ incentive to create these positions will, in part, determine the long-term viability of the housing futures market. This study explores the investment characteristics of housing and shows it is a low risk, low return investment. Within a portfolio, an allocation to housing only provides benefits to conservative investors, and no benefits if considered in an assetliability framework. The risk premium required to make housing futures attractive to a wide range of investors may make them expensive hedging tools, impeding the growth of the market.

Date: 2008
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DOI: 10.1080/10835547.2008.12089810

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