REITs, or real estate investment trusts, are outperforming the broader market this year. The Vanguard Real Estate ETF (VNQ), most popular fund in the space, is up about 31% in 2021, whereas the S&P 500 (SPY) has gained about 19%.
Certain categories within REITs like shopping centers, apartments and self-storage have done much better, as they benefit from reopening. Residential and commercial real estate rents are strongly rebounding this year, after last year’s plunge due to the pandemic.
Apartment rents surged as younger workers returned to cities and rising home prices prevented them from owning. It remains to be seen whether a surge in Delta infections and delay in return to offices being announced by many companies will impact these REITs again.
REITs have also benefited from inflation concerns, as they have historically provided some hedge against inflation
Research shows REITs are highly correlated with equities in the short term but over the longer term, they exhibit positive correlation with real estate and low or even negative correlation with equities. Thus, they add diversification benefits to the portfolio.
Nuveen Short-Term REIT ETF (NURE) invests in REITs with short-term lease agreements which may exhibit less price sensitivity to interest rate changes. The iShares Residential and Multisector Real Estate ETF (REZ) holds residential, health care, and specialized REITs.
Please watch the short video above to learn more about REIT ETFs.
Zacks’ Top Picks to Cash in on Artificial Intelligence
This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.
See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Vanguard Real Estate ETF (VNQ): ETF Research Reports
iShares Residential and Multisector Real Estate ETF (REZ): ETF Research Reports
Nuveen ShortTerm REIT ETF (NURE): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
