Why Geographic Diversification is Important in your Investment Portfolio

Why Geographic Diversification is Important in your Investment Portfolio

May 16, 2022

As rising inflation and market uncertainty continues, investors may be looking at the knock on effects, and the potential reductions to their returns.

A possible strategy to offset these impacts is to diversify your investment portfolio within real estate, instead of pursuing stocks or bonds which can be negatively impacted by high inflation, or cryptocurrency, which is still a somewhat unknown entity. Building a diversified portfolio allows you to manage risk, and there are different ways to diversify, including by location, asset class, and asset type.

Geographic diversification within your portfolio is one of the methods to hedge your bets against any major changes in one specific market. This type of investment allows investors to navigate any ups and downs that may occur in selected markets, mitigating risk and aiming for more resilient and consistent returns.

Rent prices are showing a median increase of 16.7% Y/Y as of March 2022, and some cities are exceeding national averages on these increases. But these cities are not confined to one location in the U.S. and are in fact spread across the country (1). 

On the west coast, Portland, OR has seen a 39.7% Y/Y rent increase. On the east coast meanwhile, New York City’s median rent is up 35% Y/Y. Above average increases are not only seen on the coasts, as Denver, CO saw a 21% Y/Y increase (1). 

While nationally rent prices are up, these figures show that there are variations by market, and that above average increases are not limited to one section of the country. 

Vetting real estate deals in regards to their markets is a crucial component of iintoo’s process, and emerging markets are identified as part of this process, based on factors such as:

  • High job growth
  • Population growth
  • Job diversity

A portfolio fund can provide investors with access to multiple offers in a diverse range of locations, all with one single contribution. 

With the growing need to hedge against inflation in the next few years, it may be time to diversify across the real estate market. Our latest blended portfolio Fiintoo 14 is available now and includes multifamily assets in Ohio, Colorado, Oregon, and a mixed-use asset in New York City. It is designed specifically for investors who are seeking to diversify into a spectrum of real estate properties and submarkets.  Log in to our platform to find detailed information.


(1) Globe St: 10 Cities with the Fastest-Rising Apartment Rents