Many -- even most -- clients hold foreign as well as domestic equities; some hold foreign bonds as well. Does the same principle hold for real estate? Do foreign properties belong in a diversified portfolio?

Definitely, according to Cathy Pareto of Cathy Pareto and Associates, an investment management and financial planning firm in Coral Gables, Fla. “REITs offer investors an avenue to add a real estate component to their portfolio for improved diversification,” she says. “Research has shown that securitized real estate behaves differently enough from equities to be considered a separate asset class.”

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