Blog | Measuring the benefits of including small caps & REITs in Mexican equity portfolios
The addition of small-caps and real estate investments trusts, or REITs, to Mexican equity portfolios can help improve diversification for investors.
FTSE Russell examined this diversification benefit from a correlation as well as a returns perspective. For a correlation perspective, FTSE Russell calculated the returns of three hypothetical indexes (large- and mid-cap Mexican stocks without REITs, small-cap Mexican stocks without REITs, and all-cap Mexican stocks with REITs) to explore these diversification effects. A hypothetical portfolio of all-cap Mexican equities with exposure to REITs had the lowest correlation levels relative to the other indexes.
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