By Salvatore Bruno via Iris.xyz
If you’ve been investing in Real Estate Investment Trusts (REIT) to seek competitive yields and income in the historically long 0% interest rate environment, you’ve probably been thrilled with the returns in this sector over the past 12 months. But while real estate investment trusts handily outperformed the S&P 500 index in 2016, times are changing fast.
In the wake of a growing economy, many advisors are wondering where to turn to maintain yield as rates continue to rise. The yield on 10-year Treasury securities is up from 1.37% last July to over 2.50% as of March 17th, which makes fixed-income a challenging play. And with equity prices reaching all-time highs, they present a similar challenge.
And while REITs may be the last place you may turn to seek yield in a rising rate environment, if suitable, they just may be the answer you’ve been looking for. How can that be? While REITs are often seen as interest-rate sensitive, rates don’t tell the whole story. Not by a long shot.
Here are five reasons why we believe simply shifting your strategy, but not running from REITs, may provide desired yield—even in the face of yet another rate hike:
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