Much like the first half of the year, the Fundrise portfolio continued its pattern of delivering consistent performance with its seventh straight quarter of positive returns across real estate, private credit, and venture capital.
While tariff headlines dominated the news over the past several quarters, the focus has more recently shifted to a weakening economy, fragile labor market, and the first Fed rate cut since 2024.
Despite growing concerns about the broader economic environment, the Fundrise portfolio once again was bolstered by the robust fundamentals of the asset base — the real estate portfolio continued to maintain strong operations (despite broader market headwinds), while both the private credit and venture capital portfolios outperformed.
As we look ahead, it appears increasingly likely that the Fed will (finally after much waiting and anticipation) proceed with a series of rate cuts over the next several quarters. We believe, much as we’ve discussed over the past several years now, that this eventual easing of restrictive monetary policy will bring about lower rates and ultimately higher real estate values.
Real estate poised for growth with rate cuts restarting
During its September meeting, the Federal Reserve voted to cut its benchmark interest rate by 25 basis points, the first such cut since late 2024 and the beginning of what most expect to be a series of cuts well into next year.
As most of our investors are fully aware, real estate has seen significant headwinds since the Fed first began raising rates in late 2022 to combat inflation. Over the past several years, a combination of higher interest rates, lower valuations, and a softer rental market has made real estate one of the most difficult assets in terms of returns.
And while the Fundrise real estate portfolio has outperformed most across a variety of key metrics (such as total return peak to trough, AUM growth of the platform funds, operating fundamentals), the challenge of waiting patiently for rates to fall and values to rebound has not been easy.
Fortunately, patience almost always tends to pay off when it comes to long-term investing, and we believe the breakout of real estate as one of the more attractive asset classes is now finally starting to arrive with many institutional investors and advisors touting it as a potentially attractive buying opportunity going into 2026.
Private credit remains attractive even as rates fall
The higher rate environment that emerged after 2022 created a new and uniquely attractive opportunity for higher-yielding private credit investments, and we have been aggressively deploying capital in this space for nearly three years, seeking to capture what we believed were outsized returns relative to the underlying risk.
While we initially had concerns that this window would close in 2025, we’ve seen that the combination of higher rates for longer, a weaker real estate market, and continued hesitancy from traditional lending institutions allows for a steady stream of well-priced preferred equity, mezzanine lending, and other fixed-income opportunities across both private and public markets.
The result has been a very strong yield for investors allocated to private credit portfolios, something that we expect to continue even as rates continue to come down thanks to the ongoing dislocation in lending markets.
Venture continues its breakneck performance
Though we could not have predicted it at the time, the emergence of AI alongside the launch of the Fundrise venture platform has resulted in a level of growth and performance that we would likely not have forecasted even in our most optimistic scenarios.
As we’ve revisited before, many investors felt strongly that adding venture capital as an additional asset class was a mistake given that we were not (at that time) well known venture investors.
We, of course, felt strongly that many of the relatively simple ways in which we thought about investing were transferable across asset types and that providing our investors with the ability to diversify into venture was going to be valuable to them in the long run. Looking back now, it’s hard to imagine a stronger validation of this view point than what the team has been able to deliver up until this point.
The venture portfolio now holds arguably all (or nearly all) of the most important private technology companies in the world, with a specific focus and concentration on those leading the AI revolution, this includes the majority of top names on lists like the CNBC Disruptor 50 and Forbes/Bessemer Cloud 100.
The result has been exceptional performance, with returns in the third quarter alone being more inline with what we might expect to deliver over the course of the entire year.
Equally as important, we continue to establish the Fundrise brand as not only a founder friendly investor but a partner, able to help drive growth in partnership with our millions of users across the platform.
Looking ahead
Once again, we expect that investors who have been patiently waiting for a real estate recovery to begin to see some of those benefits play out as the Fed continues on its forecasted rate cutting cycle.
Just as higher rates and softer real estate fundamentals have kept values depressed, the combined benefit of lower rates and a reversed supply demand imbalance is likely to see values appreciate.
Importantly, for many investors we expect real estate and other real assets to become an increasingly attractive hedge against the concentration of returns in public markets driven by technology and AI. The trend of investors taking some of those gains off the table and rotating into real estate or other similar assets is one we expect to see grow in popularity over the next twelve months.
Meanwhile, we will continue to leverage the now broadly diversified Fundrise platform to ensure our investors are well balanced and positioned to realize more stable returns over the long term.
As always, we greatly appreciate the trust our investors have placed in us, and welcome any feedback or questions.
