Investing in Commercial Real Estate, REITs and How to Use Them

Following one of the most devastating shake-outs in real estate values in over 80 years since the Great Depression, real estate has rebounded into one of the hottest markets in which to invest.
Since the market bottomed in March of 2009, the Vanguard REIT ETF (NYSE: VNQ) holding an assortment of 138 residential, retail, office, storage and other REITs has soared an outstanding 275%, compared to the broader market S&P 500’s 224%.
In fact, compared to the nine sectors covered by the SPDR family of sector ETFs, VNQ has beaten eight. Over the five years since the economic recovery began, the only sector to beat the REIT sector has been consumer discretionary, as noted in the graph below comparing the VNQ (black) to SPDR’s sector funds since March 15, 2009. (We’ll talk about the red dot later.)

Source: BigCharts.com

To get an idea of whether REITs will continue to outperform other sectors in the future, we need to look at what specifically made them perform so well so far. If the winds blowing in REITs sails continue, they should remain great investments. (more)
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