A Comparison of Home Purchase and Liquid Lazy Portfolio Returns in Turkey

Abstract

This study presents a comprehensive comparison between the effectiveness of home purchase and liquid Lazy portfolio strategies for generating historical returns in the Turkish market. The primary aim is to develop a liquid Lazy portfolio that outperforms residential property investments. The study covers the period from January 2010 to June 2023, focusing on high-liquidity assets including the Borsa Istanbul 100 Index, currency exchange rates, gold prices, real estate investment trusts, and major stock market indices. Methodologically, the research involves data pre-processing, logarithmic transformations, and cumulative time series creation. Portfolio optimization centers around maximizing the Sharpe ratio with three test portfolios developed. Findings indicate that all portfolios consistently outperform the benchmark Residential Property Price Index, displaying higher returns and Sharpe ratios despite increased volatility. These insights are relevant for both academic researchers and investors seeking practical applications for portfolio management. It's important to note that historical performance offers insights but not future guarantees. In conclusion, the study highlights the potential benefits of constructing scalable, liquid, and high-return Lazy portfolios as alternatives to traditional home purchases