Reality Research Serenity Scores - quant REIT scores with 10+ years of alpha and outperformance
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REITs as an asset class have returned almost 10% per year since 1990, and are a low-risk way to gain exposure to the highest quality real estate in the country. Historically, REITs with high scores in momentum, value, and quality factors tend to outperform their peers. Our partnership with Serenity Alternative Investments gives our clients access to REIT scores that can be used to build superior REIT portfolios. The Serenity Scores draw on both a wealth of financial literature regarding factor composition in the general equity market and best practices from fundamental REIT investing. There are three main factor groups employed in the Serenity Scores that emerge from financial academia and have relevance in REITs. These are value, momentum, and quality. Each of these strategies for selecting REITs has been shown to add value when applied to a broad universe of stocks, and they have strong theoretical foundations as building blocks for a REIT investment strategy. Clients of Reality Research receive a Composite Score, Value Score, Momentum Score, and Quality Score. These scores are built using Serenity Alternative Investments' proprietary library of REIT-specific factors. There are numerous use cases: (1) Fundamental funds can use the highest scores as an offensive trade entry signal, or as confirmation of signals produced by their own models. (2) Fundamental funds can use the scores as a risk signal to avoid (or even short) the names with the lowest scores. (3) Systematic funds can use these scores as an additional factor in their models.




