Real estate investment trusts and sector-related exchange traded funds have been among the most popular investments in an extended low-rate environment. However, after this year’s run, REITs may be starting to look pricey.
The REITs sector has outperformed the broader markets. Year-to-date, VNQ rose 13.9% while the S&P 500 Index gained 8.3%. Additionally, the asset category offers some attractive yields, with VNQ showing a 3.27% 12-month yield.
However, Goldman Sachs Group Inc. warned that the area is growing too risky for investors after the outperformance.
“Real Estate has outpaced the S&P 500 by 156 basis points year-to-date, which has hurt large-cap mutual fund returns given their underweight allocation to the sector,” Goldman Sachs analysts led by David Kostin One said in a note, according to Bloomberg.[related_stories]