George Doyle
Globe editors have posted this research report with permission of Provisus Wealth Management. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
The prevailing line of thinking in the investment world is that rising interest rates will spell doom for Real Estate Income Trusts (REITs). In reality the contrary is correct. The truth is that in periods of increasing short term interest rates, REITs have performed extremely well. In most instances REITs will do as well as or better than common stocks.
REITs were once considered to be simply a portfolio add on but now the case could be made that they are becoming a fundamental ingredient to sound portfolio construction. Non-traditional investments such as REITs have become a common solution as investors look for securities that have little correlation to stocks. The increased diversification that REITs offer without adding greater risk relative to stocks is certainly very enticing. As well, the current low yield environment is forcing investors to overcome ingrained biases and latch onto higher income producing securities.
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