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Investment Advisor Maintains Confidence in Real Estate

TACOMA, WA-Karl Smith, managing director with Frank Russell, an investment strategies firm that has more than $66 billion in assets under management, says "real estate has evolved.

By Janet Parker | Updated on October 30, 2001

TACOMA, WA-Despite the real estate downturn in markets across the country, Karl Smith, a managing director with Frank Russell Co., a firm managing more than $66 billion, tells GlobeSt.com it is “absolutely” continuing to advise its pension fund clients to hold a commercial real estate position in their diversified portfolios.

“There’s no doubt that real estate isn’t immune from what’s happening in the broader economy,” says Smith, whose firm handles the pension fund dollars of corporations like AT&T, Hitachi, BHP and General Motors. “But in our view real estate has evolved, and we do feel that it should be included in most pension plans’ asset strategies.”

“Real estate has been the best-performing asset class over the last three years—by a significant margin,” says Smith. “It has also achieved those returns with significantly less volatility than other classes of assets,” he adds. In the last three years, Smith says those annualized three-year returns, as of June 30, were 11.9%–as compared to 3.9% for U.S. equities, 6.3% for U.S. fixed income, and -0.9% for international equities. “Clearly,” says Smith, “investors with meaningful allocations in real estate over that period have been rewarded.

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