Real estate investments are a way to diversify a portfolio by providing exposure to an asset class different from stocks and bonds. Real estate has a low correlation with other traditional assets, meaning that its performance does not move in tandem with other assets. This can help to reduce overall portfolio volatility and increase stability, as well as potentially provide a source of stable income through rent. Professional investors also actively use real estate investments for this purpose. Additionally, real estate has the potential for long-term appreciation, which can help drive portfolio growth. It's important to keep in mind that, like any investment, real estate comes with its own set of risks and requires careful consideration before making an investment.
Example: Norwegian Pension Fund holdings (2022)
Source: Government Pension Fund Global, Norway. As of 31 December 2022.