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Risk assessment

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  • Risk assessment

    Over a 10 year investing horizon, what carries more risk to the principle investment?

    X dollars into a total stock market index fun (VTI)


    The same dollars into a private lending (debt) real estate fund. (Assuming they have a track record of success and responsibility, professionalism and generally know what they are doing).

    Again this is just risk to principle investment. The question has nothing to do with returns, or fees.

    Thank you in advance!

  • #2
    Past performance does not equal future results but the real estate fund will have more risk. Even investors that know what they are doing can easily underperform the market.


    • #3
      This is a question best answered in retrospect.


      • #4
        A total market fund is more diversified than private lending and has greater liquidity than private equity , so private equity lending should have should pay a premium return for the loss of liquidity and higher risk. Whether it does or not, I dont know.


        • #5
          You would need a group of private lending (debt) real estate funds to diversify out idiosyncratic management risks. And you'd still be at greater risk in the real estate funds simply because you are confined to a single sector, plus the value of real estate is dependent on local economic conditions.