Real estate investments, or REIT, are usually considered as revenue investments, so some investors panic and sell them when interest rates rise. However, the Federal Reserve's latest political change should put fear to rest.
Meanwhile, you see that REIT has performed very well compared to the broader stock market in the long run. We list S & P 500 REITs, sorted by yield, below.
In August, we pointed out that a knee-point reaction to avoid REITs when interest rates rise is not supported by performance. An increasing interest rate environment is typically one that also has significant economic growth, which means that REIT's rental income and earnings will increase. This tends to offset negative price effects from rising prices.
Fed's recent changes in direction may have eliminated the usual fear of interest rate increases, at least for now.
And the silver lining is that REITs as a group have measured well against the broader stock market over long periods. This is how the S & P 500 REIT industrial group's total return (with reinvested dividend) compared to the entire S & P 500
SPX, + 0.1
over various periods. First, we show total returns and then average annual returns.
Total return through February 15, except as indicated:
|S & P 500 REITs||S & P 500|
|2019||12.7%||]||2 years  22.9%  3 years [4265%] 58.3% [5 years] 61.8%||61.8%||58.3%||] 67.3%||10 years||388.2%||314.5%|
|15 years||275.6%|| 230.2%|