Asked and Answered: What’s the Value of REITs in a Portfolio?

Real estate may be cyclical, but having exposure to real estate — especially commercial real estate — in a portfolio as an alternative source of income can be beneficial. What’s the best way to evaluate whether it makes sense for a client? Andy Blocher, chief financial officer of Federal Realty Investment Trust, talked to Financial Planning about the risks and rewards of publicly traded REITS.

Get access to this article and thousands more...

All Financial Planning articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Comments (1)
REITS definitely add diversification value to a portfolio. But don't stop there.

Diversification is the one true "Free Lunch" of investing. But if a person starts with just considering long stocks, bonds (including inflation-indexed bonds) and real estate as being the only portfolio options, then true diversification cannot be achieved. I discuss this throughout my book "Jackass Investing: Don't do it. Profit from it." (#1 Amazon Kindle best-seller in the mutual fund category).

My approach to diversification is quite different from conventional investment wisdom. One concept I think you'll find most interesting is in that I replace asset classes with "return drivers" and "trading strategies" (as I point out in the book, asset classes are simply long-only trading strategies that do not attempt to disaggregate their many separate return drivers). Once viewed in this fashion it is easy to create a truly diversified portfolio, rather than one constrained by the shackles of asset classes.

I'm pleased to provide a complimentary link to the final chapter of the book, where I present the benefits (greater returns & less risk) of a truly diversified portfolio: http://bit.ly/vxDo6v.
Posted by mike d | Monday, April 02 2012 at 3:06PM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Already a subscriber? Log in here