ABSTRACT
In Chapter 4, methods of constructing property indices were presented. In Chapter 7, Modern Portfolio Theory (MPT) was presented. The optimal diversification of property portfolios was discussed in Chapter 9. This chapter considers the role of property in multi- or mixed-asset portfolios – that is, those containing shares, bonds and property. Among other things, the optimal weight which should be allocated to property is analysed. This step, which is known as inter-asset diversification, is very important and has a much greater impact on the overall portfolio performance than the decision as to how to invest within each asset category (intra-asset diversification).
