The Right REITs for Retirees

02/07/2020 5:00 am EST

Focus: REITS

Robert Carlson

Editor, Retirement Watch

Real estate investment trusts (REITs) have a low correlation with the broad stock indexes, explains income expert Bob Carlson, editor of Retirement Watch.

That’s one reason I frequently recommend owning them, especially through Cohen & Steers Realty Shares (CSRSX). The fund had its ups and downs in the last quarter of 2019, but it recently began a fresh rally back toward its August highs. CSRSX is up 34.70% for the last 12 months.

Like many of the funds I recommend, CSRSX’s managers focus on a relatively small number of stocks they find attractive. Recently, it held 43 REITs and 43% of the fund was in the 10 largest positions. CSRSX first develops an economic outlook and then determines how the outlook will affect different REIT sectors.

Finally, the fund’s analysts use their extensive knowledge of the REIT world to identify REITs in those sectors with top quality properties and management that are selling at reasonable prices.

The top sectors in the fund recently were infrastructure, apartments, health care, data centers and industrial. The largest positions in the fund were Equinix (EQIX), American Tower (AMT), UDR (UDR), Welltower (WELL) and Essex Property Trust (ESS).

I continue to believe that this is a positive economic and investment environment for REITs. They might not replicate the strong returns of 2019 but should deliver strong, steady returns.

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