InvestorQ : Why are hedge funds buying REIT?
Nishita Gala made post

Why are hedge funds buying REIT?

Diya Chitale answered.
1 year ago

In the case of a hedge fund focused on REITs, this means that the manager has the flexibility to invest in the REIT market as he or she sees fit. This opens the possibility for not only buying and holding REITs (“going long”) but also of betting against (“shorting”) REITs. REITs are often utilized as a hedge against the bear market in equity.

Using straightforward quantitative models borrowed from prominent equity investors it is possible to construct a model that takes advantage of the optionality and liquidity of the REIT market. Deploying this model in a hedge fund structure and adding short sales further enhances the model’s edge, delivering historical returns that are compelling both nominally, and on a risk-adjusted basis.