Billionaire hedge fund manager Ray Dalio is advising against buying and holding real estate in the current economic climate, calling it “not an effective investment strategy.”
What Happened: In a recent X post and an accompanying video, the founder of Bridgewater Associates warned that real estate faces significant risks from rising interest rates and potential tax increases.
Dalio explained his position in a short video clip shared by him, highlighting that the real estate sector is more susceptible to changes in interest rates than it is to inflation.
“Real Estate is more interest rate sensitive than inflation sensitive,” Dalio stated. This sensitivity, he argued, means that in the present economic environment, the value of property is likely to “go down in real terms.”
He also pointed to a lack of diversification as a key weakness of real estate investment. As a fixed asset, property is particularly vulnerable to taxation. “It is a fixed asset that is the easiest asset to tax,” Dalio said, explaining that governments can always find a way to generate revenue from it.
This makes it a less-than-ideal asset for those seeking to diversify their portfolio and protect their wealth.
Finally, Dalio noted that real estate is “nailed down,” making it difficult for investors to move their money quickly in response to changing market conditions. This inflexibility further diminishes its appeal as a dynamic investment tool.
Why It Matters: Dalio’s views challenge the long-held belief that real estate and gold are infallible safe havens for wealth in uncertain times.
Here’s a list of real estate exposed exchange-traded funds that investors could consider.
| ETFs | YTD Performance | One Year Performance |
| SPDR S&P Homebuilders ETF (NYSE:XHB) | 3.90% | 0.35% |
| Vanguard Real Estate Index Fund ETF (NYSE:VNQ) | 0.20% | -2.16% |
| Schwab US REIT ETF (NYSE:SCHH) | -0.48% | -3.58% |
| Real Estate Select Sector SPDR Fund (NYSE:XLRE) | 1.79% | -1.32% |
| iShares US Real Estate ETF (NYSE:IYR) | 2.03% | -0.66% |
| iShares Core US REIT ETF (NYSE:USRT) | -2.03% | -2.71% |
| DFA Dimensional Global Real Estate ETF (NYSE:DFGR) | 4.61% | -0.45% |
| SPDR Dow Jones REIT ETF (NYSE:RWR) | -2.85% | -4.08% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, ended lower on Monday. The SPY was down 0.20% at $635.92, while the QQQ declined 0.30% to $572.85, according to Benzinga Pro data.
On Tuesday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading lower.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
