The gating of billions of dollars in commercial real estate funds by six U. K. institutional money managers has quite properly roiled markets. But, as Bloomberg’s Richard Breslow notes, it’s not because of the absolute size of the funds or because it will take some time for investors to get their cash out; rather, because it has exposed the manifold flaws continuing to drive investment psychology and practice.
Flaws reminiscent of some of the most obtuse assumptions that led to the financial crisis and have been the cornerstone of extraordinary monetary policies since then.
These funds exist because of the desperate search for any sort of yield. Can’t make any money from sovereign bonds? Just substitute into your portfolio a slice of a retail warehouse in Northampton.
This post was published at Zero Hedge on Jul 6, 2016.
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