NEW YORK (Fabian Capital Management) -- Real estate investment trusts, or REITs, have come a long way from the drubbing they experienced this time last year. The Federal Reserve-induced taper tantrum led to a significant selloff in these income-generating vehicles that was primarily driven by rising interest rates and the fear of a slowing real estate market.
The majority of REIT ETFs fell between 15%-20% in a two-month time frame that culminated in an excellent opportunity for value-seeking investors to purchase these funds at attractive price points and much higher yields. Since that selloff we have seen a complete price retracement back to the prior highs as yield-hungry buyers have stepped back into the real estate game.
One of the attractive attributes of REITs is they are considered an alternative asset class with different risks and growth drivers than traditional stocks and bonds. This makes them an excellent opportunity to diversify your portfolio in an unconventional asset class, in addition to adding a much higher yield than the average dividend-paying stock.
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