From an asset allocation perspective, real estate has, historically, outperformed broader equities as the yield curve flattens, supporting real estate investment trusts (REITs) as possible “investments” as bond spreads tighten. We believe REITs are poised to outperform other asset classes over the next several years, and now may be the time to consider increasing or adding to listed real estate in a diversified portfolio.
Bottom Line
REITs are a unique and growing asset class that continues to garner attention from the investment community for multiple reasons. The benefits of strategically allocating to listed real estate remain unchanged as REITs can offer diversification potential due to low correlations to other asset classes, stable dividends, and a possible hedge to rising inflation.
Add in the current trends, and it may potentially be an excellent time to jump into the market. This may be especially true for those willing to combine the recent market trends with the potential benefits of active management in this space. This mix could give investors a potent combination for gaining exposure to this often overlooked area of the equity world, at least if strong fundamentals hold into the future.
Learn more about our approach in the real estate market by visiting our real assets investing center.
This article was written by Tyler Wilton, CFA, Investment Specialists for Liquid Real Assets at DWS.