Asset Allocation and REITS

Asset Allocation and REITS

By: Martin M. Shenkman, CPA, MBA, JD

If your financial planner recommends an allocation to real estate as part of your overall investment allocation model, and suggests real estate investment trusts (REITs) as the vehicle, dig deeper. REIT is almost as generic a term as stocks. Shopping-center REITs, for example, may perform very differently than other REITs, such as apartment REITs. REITs can also vary geographically. If you really want to diversify, all these variables should be evaluated. Be wary of advisers who recommend index funds on the basis that stock pickers cannot beat the market, and then use private real estate deals for your real estate allocation. There is an inherent inconsistency in these positions. Ask why.

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