ACCRE Mid-Month Update

So-far, so good for the month.  ACCRE is up about 1.5% as of today, compared to about 0.8% for the S&P.  That’s the sort of performance we like to report every month.

Mid-month is usually the time we talk about the Sharpe Ratio and other correlation statistics.  As faithful readers know, a well-curated portfolio of real estate is not only a great investment, but also provides diversification.  One way we measure this is with the Sharpe Ratio, which indicates the excess return (return over and above what we would have earned in T-Bills) adjusted for risk (measured by portfolio standard deviation).  A higher Sharpe Ratio means we’re doing well after accounting for risk.

ACCRE’s Sharpe Ratio consistently beats the S&P, in no small part because ACCRE has far less volatility.  September was no exception.  ACCRE’s Sharpe Ratio was 0.06% (that’s daily excess return) compared to the S&P’s 0.02%.  In other words, we’re beating the S&P by three times on a risk-adjusted basis.

One other important point — the correlation coefficient stands at 42.43% as of the end of September.  This means that overall, ACCRE provides a very high degree of diversification in a broad securities portfolio.

As always, subscribers are provided monthly updates on the actual components of the ACCRE portfolio, as well as e-mail alerts when we make a trade.

 

We’re back!

Whew!

As many of you know, our web site was “down” for a week.  We had a glitch with some third-party software (essentially, the software got old and stopped working) and it literally took a week to get the darned problem solve.  Please be aware that this had NOTHING to do with the actual trades themselves or the portfolio management, which is handled on a separate account with a FINRA-licensed (and SIPC-insured) brokerage.

Fortunately, I had a list of all of our subscribers (on a separate sheet) and sent an e-mail to each of them about our trade announcement and our September monthly update.  For the rest of you readers, who might not be on our subscribers list, following is the text of the September update:

The S&P 500 had a spectacular month (up 1.72%), but that barely makes up for its dismal performance in August (down 1.81%). Conversely, ACCRE had a slight down month (-0.4%) but August was one of our best months ever (up 3.6%). As such, we continue to lead the S&P (and the S&P REIT index) in total returns since inception.ACCRE September 2019

One other item caught my attention this week. News reports noted that this was the first time in a while that the S&P 500 had three consecutive “up” quarters, which is indeed great news for the market. However, with that bit of info, I wanted to compare the S&P’s performance to ACCRE’s for the past three quarters. The chart following “normalizes” both indices to 1 as of January 1, and the rest speaks for itself:

2019 Normalized

I’ve long noted that real estate returns should be examined with a long-term horizon. The chart notes that for most of the year, ACCRE tracked the S&P nicely, albeit with considerably less volatility. However, starting about mid-summer, we really took off compared to the S&P. I suggested this may be a flight to safety, and indeed the real shift occurred when the S&P suffered its summer melt-down. That said, ACCRE ends the first three quarters of the year up 23%, while the S&P is up 18.6% for that same period.

I will almost certainly be making some portfolio shifts this month. As always, subscribers will be informed when I make such trades, and the new portfolio makeup after those trades are made. Y’all have a great October!