Displaying items by tag: reits

Monday, 01 October 2018 10:46

How to Adjust Your Portfolio for Rising Rates

(New York)

Rates are rising and new statements out of the Fed make it seem like the central bank could become more aggressive with its hike. With that in mind, the Wall Street Journal thinks it is time to adjust portfolios to account for a hawkish Fed. The biggest recommendation that the WSJ makes is that investors in retirement should keep a healthy allocation to stocks. Even though rates are rising, yields may not get high enough quickly enough to provide good returns. Accordingly, keeping a solid portion of capital in equity seems smart, but don’t swing for the fences. Next, make sure to stay very diversified to mitigate risks, and particularly, beware rate sensitive sectors like utilities or REITs.


FINSUM: This is sound advice, though nothing that would not be second nature for an advisor.

Published in Bonds: Total Market
Friday, 28 September 2018 10:33

5 Stocks to Ride a Retail Comeback

(New York)

Retail has been doing great lately and may be poised to continue its gains. However, the best way to play the sector might not be to buy retail stocks. Instead, consider buying real estate stocks that would gain from retail’s success. With that in mind, Barron’s has run a piece choosing seven real estate stocks that will benefit from retail’s growth: Simon Property Group, Link REIT, Brixmor Property Group, Public Storage, and Mid-America Apartment Communities.


FINSUM: Make no mistake, these are deeply contrarian bets given the challenges mall and other retail REITs are facing. That said, if the strategy works, it may do so in a big way.

Published in Eq: Real Estate
Friday, 28 September 2018 10:31

A Big Boon for REITs

(New York)

One of the important elements of last year’s tax changes that has not been covered much by the mainstream financial press is the way in which the new tax code proves a big boon for REITs. That big gain is that the effective tax rate on REITs has been slashed from 37% to just 29.6%, a big move downward. One REIT industry expert summed up the changes this way, saying “Now, REITs have even more of an advantage over fixed-income products … Seventy percent of REIT returns have historically come from income, so any relative pickup in income is a big benefit for investors”.


FINSUM: This seems like a big help to REIT investors, and it couldn’t have arrived at a better time given that rate rises will inevitable hurt REITs a bit.

Published in Eq: Real Estate
Monday, 17 September 2018 09:41

The Best Undervalued REITs

(New York)

REITs are a tough area to invest in right now. On the one hand they look vulnerable because of the rising rate environment, but they have also surged recently at the same time as offering enticing dividends for investors. The answer, then, may be to find undervalued REITs, and Barron’s has put out an article helping to do just that. Here are some REITs the publication highlights: Invitation Homes, Front Yard Residential, Digital Realty Trust, InterXion Holding, LaSalle Hotel Properties, and Extended Stay America.


FINSUM: REITs tend to have very good dividends, but tend to suffer during periods of rising rates because of this. They seem like a good source of income right now, but need to be chosen very carefully.

Published in Eq: Large Cap
Thursday, 13 September 2018 09:12

The Best REIT ETFs

(New York)

A REIT as an ETF might be an odd concept for some advisors. Since REITS are a special asset class unto themselves, and ETF made up of them could seem foreign. Their big advantage is that they are much cheaper than actively managed real estate strategies. However, risks abound, especially as many REITs tend to focus only on the US market, which could be very risky at the moment. One good REIT ETF is the Schwab US REIT, which has returned over 5% this year despite rising rates, and sports a 4%+ yield. Schwab points out that one of the best parts of REITS is that they “do not move in lockstep with either stocks or bonds.” The Vanguard Real Estate ETF is another good REIT choice. For global exposure try the SPDR Dow Jones Global Real Estate.


FINSUM: We like REITs in principal, but rates are a big worry at the moment. They seem like a good way to earn yield right now, but should probably be hedged.

Published in Eq: Large Cap
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