The past days and weeks have clearly shown that the world of investing is no walk in the park. Stock market volatility—driven by geopolitical tensions, fears of trade wars, or uncertainty around inflation—can be deeply unsettling for investors. And that’s completely understandable. We see investors anxiously watching their portfolios dip into the red, asking the pressing question: Where should I put my money in times like these?
In such moments, it’s crucial to stay calm and focus on long-term strategy. One of the fundamental principles of investing is diversification—it helps spread risk and minimize the impact of potential losses. It is often said that investors should allocate their portfolios across different asset classes, such as equities, bonds, and real estate. For example, a conservative investor may hold a higher proportion of bonds, while a more dynamic investor might lean toward stocks. The key is to find the right balance that matches your personal risk profile.
Today, with stock markets remaining volatile and interest rates on the rise, alternative investments are gaining traction. Investors are seeking safe harbors for their capital, turning their attention to assets that offer stability and protection against inflation. These safe havens traditionally include precious metals, low-risk government bonds, or conservative equity funds. However, in recent years, real estate funds have gained significant popularity. These funds offer a compelling mix of stability and long-term appreciation potential. What's more, they allow even small investors to participate in the value growth of large commercial properties they would otherwise be unable to afford.
Real estate funds invest in commercial properties such as office buildings, shopping centers, and logistics parks. This diversification brings a number of benefits—most notably, lower volatility compared to equities and, consequently, more stable returns.
In previous years, many investors favored more dynamic vehicles such as ETFs focused on growth stocks. While these strategies delivered strong returns during times of economic expansion, periods of decline have revealed their downside: overconcentration in these assets can be risky. Investors who panic and sell off their stocks during downturns often lock in irreversible losses.
Real estate funds, on the other hand, can serve as a stabilizing component in a portfolio. Thanks to their lower volatility and steady rental income, they help reduce overall portfolio risk—giving investors greater peace of mind. And that’s especially important now, when, according to a survey by the Czech Capital Market Association (AKAT), 41% of Czechs already consider themselves investors.
That’s not to say investors should abandon equities altogether. Diversification remains essential. But in the current environment, real estate funds should play a more prominent role in a balanced portfolio. They should be the anchor that holds the portfolio steady through stormy seas.
The Czech real estate fund market offers a wide range of options. Investors can choose from funds focused on different property types and regions. Some specialize in office buildings in Prague, others in logistics parks near key transportation hubs, and others in shopping centers in regional cities. It’s important to carefully assess each fund’s investment strategy, historical performance, and fee structure. And we must not forget: Czech banks are currently holding over CZK 3.8 trillion in deposits—money that could be working more efficiently, rather than losing value to inflation.
