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."

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

• 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).

Download the full 17 page report here.