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Head to Cohen & Steers for REIT Exposure

10/10/2019 5:00 am EST

Focus: REITS

Robert Carlson

Editor, Retirement Watch

I’ve said for some time this is an ideal economic environment for real estate investment trusts (REITs), and Cohen & Steers Realty Shares (CSRSX) has been proving my point in 2019, asserts Bob Carlson, mutual fund expert and editor of Retirement Watch.

REITs are the ideal long-term investment, whether you are in retirement or planning for it. I’ve owned CSRSX in my portfolio for a long time and will continue to own it indefinitely.

REITs have outperformed the S&P 500 over a long period. They also aren’t highly correlated with the stock index, so sometimes they earn positive returns when stock indexes decline, as happened in the technology stock bust following 1999.

By owning commercial real estate, REITs benefit from a growing economy. They do especially well in a slowly growing economy because there’s less speculative overbuilding that causes rents and property values to collapse. REITs also provide inflation protection because they are backed by real estate assets.

CSRSX probably is the oldest mutual fund dedicated to REITs and is among the top performers over almost all time periods, according to Morningstar.

The fund has had a consistent process of identifying where we are in the economic cycle and determining which REIT sectors it should own and avoid in that environment.

Then, the fund focuses on REITs in those sectors that have quality properties and quality management and sell at reasonable prices. The fund recently held only 40 positions. Almost 55% of the portfolio was in the 10 largest positions.

The top sectors were infrastructure, apartments, self storage, data centers and health care. Top positions were American Tower (AMT), Equinix (EQIX), Welltower (WELL), UDR (UDR) and SBA Communications (SBAC).

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