Investors are wary of real estate investment trusts since they crashed along with the market 2008 and failed to deliver their much-hyped diversification benefits. However, a desire for income and dividends could bring investors back to this beaten-down sector and REIT ETFs.
With investors turning to alternative avenues to generate additional income, real estate investment trusts, along with related exchange traded funds, are drawing upon an increasingly higher investment base. However, potential investors should be aware that this asset class is still an equity play at heart.
REITs have produced annualized returns of more than 10% over the past decade, and more recently, yields range between 3% to 8%, reports Walter Updegrave for CNN Money. [S&P’s Retail REIT ETF Pick]
However, REITs still trade like other equities, which are subject to potential capital appreciation or depreciation. Notably, investments in REITs plunged almost 50% during the real estate market collapse and the financial crisis of 2008. Additionally, the assets dropped 15% in late summer last year at the height of the Eurozone and U.S. double-dip recession scares.