High-quality REITs can boost your returns

Article Excerpt

Real estate investment trusts (REITs) can play a useful role in well-balanced, income-seeking portfolios. Not only can they provide regular and stable income streams, but they can also deliver capital gains. In addition, they can add diversification, reducing the overall risk and volatility of the portfolio. Many investors are reluctant to consider direct investments into commercial property for their portfolios. The reasons include the high minimum investments required to invest in commercial property, time constraints to manage the properties and the lack of liquidity. However, publicly listed REITs can solve those problems for retail investors. Exchange-traded funds that hold REITs, as well as perhaps other real estate companies, in a single portfolio, can add diversification and let investors hold a variety of the best REITs. What’s more, REITs have performed well over time when compared to many other asset classes; the table below shows the performance and risk of REITs and other asset classes from 1975-2015. Here are four key points from the table: •…

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