Seemingly contradictory to all the horror stories surrounding real – estate in recent years, real – estate securities have actually done exceptionally well.
Funds focused on U.S. real – estate securities out performed all other categories of stock funds over the past three years, returning an average of more than 31% annually.
Some see real – estate as a great option for the sake of diversification because real estate generates income from contracts and leases, its considered very reliable when compared with income from sales at other kinds of businesses.
It seems, however, that real – estates diversification advantages aren’t as province as a decade ago.
In general, real – estate funds own shares of real –estate investment trusts (REITs), which operate hotels, retail properties, industrial properties, apartment complexes and more. Multi – family housing has reaped the benefits of a struggling market for single- family housing, as apartment vacancies are at a premium.
Research, meanwhile, indicates that many commercial sectors are starting to bounce back from the recession. Signs point to real – estate being a relatively sale investment over the long-term.
One investment advisor offers that real – estate can provide a yield similar to fixed in come products but high potential returns like that of traditional equities. Thus, REITs are a great option at present, compared with bonds.
The average investor, then, with a 60/40 percent mix of stocks and bonds might consider a move to a mix of 60 percent equities, 5-10 real – estate should be in between equities and fixed income in terms of risk.