The big shift in the markets continues as economic activity increases and investors turn to assets that struggled during the pandemic, notes Bob Carlson, editor of Retirement Watch — and a participant in The MoneyShow Orlando Conference on June 10-12. Learn more here.

Real estate investment trusts (REITs) have outperformed the broader stock market lately, and Cohen & Steers Realty Shares (CSRSX) remains in the top quartile among REIT funds over almost all time periods.

Investors are buying companies that were beaten down during the recession that include hotels, retail properties and office buildings. There also has been an increase in mergers and acquisitions among REITs.

CSRSX prepared for the turnaround late in 2020 by adding positions in only the highest-quality companies among depressed sectors that were likely to rebound once vaccines were widely administered.

The fund also filled its portfolio with sectors likely to benefit from some long-term trends, such as cell tower and data storage companies.

Over 12 months, it is up only 42.16%. Normally that would be an excellent 12 months. But REITs lagged through much of the pandemic economy and began to turn around only late in 2020. Compared to other funds, that’s a low 12-month return.

Commodity prices are recovering after falling for years. Many commodities are in short supply because producers reduced capacity early in the recession, and it can take a while to ramp up production to meet rising demand from the expanding global economy. Commodities also benefit from expectations of higher inflation.

We own a broad group of commodities through iShares GSCI Commodity Dynamic Roll Strategy (COMT). The exchange-traded fund seeks to match the return of the GSCI Dynamic Roll Index.

The index is weighted toward energy commodities that currently compose about 55% of the ETF. But it also is diversified among agriculture, livestock and industrial metals commodities. The fund is up 16.48% over three months, 25.35% for the year to date and 52.07% over 12 months.

Gold is a commodity that has been lagging since last August but is showing signs of resuming its climb as inflationary expectations increase.

The iShares Gold Trust (IAU) is up 5.44% in the last four weeks. But it is down 3.75% for the year to date and is up only 6.27% over the last 12 months.

I expect gold will continue the gains it was generating in the first half of 2021 now that inflationary expectations and actual inflation data are rising. It also should rise because the policies of central banks reduce the value of currencies.

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