Happy New Years Eve!

It’s been a rough month or more for equity investors, and hopefully we’ll get some respite from the volatility in 2019.  As noted in previous posts, ACCRE has attenuated much of this volatility, anthough we are not totall immune to the bounces.

With that, though, REITs in general seem to be doing very well as we end the year.  We’ve noted throughout the life of ACCRE that we continue to outperform REITs in general as well as the S&P.   REITs in general continue to be viewed as a highly liquid safe haven for equity portfolios.  Here is a great article on the subject that just came out from CNBC via NAREIT.  Enjoy!

 

Returns versus Volatility

The past few weeks have been lousy for the stock market in general, and ACCRE has been no exception.  As noted our monthly update, November was a very good month for ACCRE and REITs overall, but much of that has been lost in the past few trading sessions.

I decided to take a peek at the past 20 trading sessions, and in particular the performance of ACCRE versus the S&P 500.  The results are telling.  I began by normalizing both the S&P and ACCRE, setting their closing values as of 11/19 equal to 100, then tracked the performance for the next 20 days.  The S&P is down slightly over 5.38%, while ACCRE is also down, albeit only 4.26%.  More telling, though, are the comparative volatility statistics.  ACCRE has a standard deviation over that period of 1.38%, while the S&P has a volatility of 2.18%.

Nothing would have protected a fully-invested equity index fund in the past month, but a significant position in ACCRE would have both attenuated these losses as well as offered considerably less volatility.

As of 12 17 18

November fund update

ACCRE has done very well, and frankly so have REITs in general. We’ve continued to out-perform the S&P, and after a few months of lagging the S&P, we rebounded quite nicely in November. Specifically, ACCRE enjoyed a 4.58% return in November, for an overall cumulative return, since inception, of 39.99%. During November, the overall return for the S&P was 1.79%, with a cumulative return (since the inception of ACCRE) of 16.82%. Thus, a dollar invested in ACCRE at the inception would be worth $1.40 today, while a dollar invested in the S&P would be worth $1.17. Had that same dollar been invested in a diversified portfolio of REITs, it would be worth $1.10 today.

November 2018

In addition, we calculate the Sharpe Ratio, which measures the average daily excess return compared to the average daily standard deviation. In other words, how much return are we getting, over and above what we would have gotten in T-bills, for the amount of volatility risk we are taking on? The average daily excess return for ACCRE over the life of the fund is 0.068633%. On a 365-day year, that translates to an annualized average excess return of about 25.1%. That’s the amount we would have earned over and above what we would have earned in 13-week T-bills. Comparatively, the average excess return on the S&P, annualized, is about 8.4%. Further, the volatility on the S&P has been about 1.5 times ACCRE’s volatility, so ACCRE’s Sharp Ratio is .084, compared to the S&P Sharpe Ratio of 0.30. We’re earning almost three times as much as the S&P on a risk-adjusted basis.

Best wishes for a great Holiday Season!