If you are reading this article, you are probably already researching ways to gain exposure to real assets to diversify client portfolios. Commercial real estate is a fundamental asset class that should be part of every investor’s portfolio, and stock exchange-listed equity REITs provide an effective and efficient way of achieving diversification to potentially increase long-term portfolio returns and reduce portfolio volatility through ownership of income-producing real estate.
Perhaps unlike other real assets such as commodities, listed REITs are total return investments, providing a steady stream of dividend income and the potential for long-term capital appreciation. Equity REITs generate rental income from the tenants that occupy their real estate, and can also potentially produce gains from buying and selling assets over time. They are required by law to distribute at least 90 percent of their taxable income each year to their shareholders, and in practice many distri