Fundrise Says Portfolio Outperforms, Even with Fed Induced Recession on the Way

Real estate investment platform Fundrise is out with its Q3 investor letter profiling its performance.

Fundrise is a platform that offerings fund like vehicles that invest in various real estate or property assets.  The offerings are available to both non-accredited and accredited investors as they utilize the Reg A+ securities exemption. Earlier this year, Fundrise said it was entering the early stage funding space, a deviation from its real estate roots.

Using a benchmark of the weighted average aggregate performance of all client accounts during the period net of a 0.15% advisory fee, Fundrise reports that it customers earned a return of 5.4% – year to date, through September. Fundrise contrast this return to all US Public REITs, which performed dismally at -28.34% and the S&P at -23.87%. Some of Fundrise’s individual funds are doing much better than the average.

Fundrise points to the Fed’s ongoing battle with inflation which it has yet to tame. The CPI out this week once again delivered the news of decades-high inflation, increasing the expectation that the Fed will be even more aggressive in raising rates.

Fundrise states its expectation going forward:

“In our mid-year letter, we stated that we believe the broader Fundrise portfolio, and its underlying investment strategies, represent as attractive an asset to hold in this environment as any we’re aware of… and three months later, this still holds true.

Again, this is not because we believe the portfolio is immune to macroeconomic shockwaves or the impacts of rising rates. Such a belief would be born of hubris and a recipe for disaster.

Instead, (as stated before) our confidence stems from the fact that the Fundrise portfolio is made up of real assets (i.e., actual physical properties) which, in contrast to financial assets, derive their value from the utility they provide in people’s everyday lives.”

Additionally, Fundrise said that “as long as rates stay elevated, the rent-vs-buy decision will continue to skew in favor” of rental properties, a segment where they actively invest.

Striking a more positive note, Fundrise shared that it is already looking ahead to the bottom and a return to a better investing environment.

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