Donald Trump may be higher profile, but your next-door neighbors might also be commercial real-estate moguls, just on a smaller scale. For the average investor, real-estate investment trust funds specializing in nonresidential properties have become increasingly popular places to put money.
As New Orleans-based writer Craig Guillot explains in the December issue of BetterInvesting Magazine, “as a whole, REITs have performed better than the Standard & Poor’s 500 index in recent years because commercial real estate never saw the pain and suffering that the housing market did. Almost every category of REITs the National Association of Real Estate Investment Trusts tracks has had double-digit returns so far in 2012, says Calvin Schnure, vice president of research for the Washington, D.C.-based association. Year-to-date returns are near 17 percent, double that of the average return for diversified stock funds.”
“Although investors have been pulling fistloads of money out of other stock fund groups, REITs have seen a tremendous influx of capital. REITs raised $51 billion in 2011 from public equity and debt markets, NAREIT says. This was the most capital raised in a year in the industry’s history. Through August of this year, REITs have raised $45 billion — well on track to surpass 2011,” Guillot writes.
“REITs have used this capital to become the most active buyers of real estate in the commercial market and have acquired more than $27.3 billion worth of properties since 2010,” he continues.
“… As of Oct. 2, the 129 REIT funds had a total year-to-date return of 16 percent. Some of the hottest sectors included industrial (25 percent), mixed industrial/office (24 percent), retail (23 percent), timber (28 percent) and infrastructure (20 percent). Although much of that performance has been driven by fundamentals in the commercial real-estate market, it has also been driven by investors flocking to REITs.”
To read the entire article, see BetterInvesting’s December issue, which appears in digital format early next week and begins arriving in homes the week of Nov. 13. Magazine subscriptions are available at the Betterinvesting website and digital only versions are sold at Amazon.com and the Apple iTunes store.
For more about investing in mutual funds, including REITs and exchange-traded funds, check out BetterInvesting’s newly revised Mutual Fund Handbook. Available as an e-book or PDF, the 2012 edition teaches the fundamentals of mutual fund investing using BetterInvesting’s online tools to select, compare and monitor stock and bond mutual funds and ETFs.
The manual is $15 for members ($20 for nonmembers) via the BetterInvesting online store. To get your copy, click here. Or download a free sample chapter of the Mutual Fund Handbook and also try out BetterInvesting’s free mutual fund resources.
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