Fearful of zooming semiconductor stocks and wild Internet offerings? The stodgy real estate investment trust sector might provide some succor for white-knuckled investors who don't want to resort to bonds.

"At a certain point, real assets start to look better than financial assets," says James Griffin, chief strategist at

Aeltus Investment Management

, Hartford, Conn. "No question that financial assets have vastly outperformed real estate assets in the 1990s, and that can't go on forever. The question is when would such a shift occur?"

In some circles, that shift is already occurring. Since the beginning of the year, the real estate investment trust sector has gained 30.3%, compared with a gain of about 23% for the

S&P 500

, according to

Media General Financial Services

. This rather impressive surge comes with a dividend yield of 5.9% for the industry, compared with a market-wide dividend of a paltry 2%.

Despite this impressive performance, Wall Street analysts remain somewhat reticent about REITs. Strategists pontificate far more about technology issues, partly because the media has become obsessed with servers, chips and browsers at the expense of bricks and mortar. And perhaps memories of spectacular corporate and retail real estate failures earlier in the decade remain too fresh for many analysts to face.

But some people are charging ahead. In October

Crescent Real Estate Equities

(CEI) - Get Report

bought an ailing project in Houston, where real estate investment trusts have struggled since oil's big bust in the 1980s. Richard Rainwater, known for a deft investing touch, chairs the Crescent REIT.

Further supporting the REITs' resurgence is the combination of still-weak real estate markets and the growing amounts of investable cash available. Moreover, as corporate real estate begins to recover, traditional real estate players, such as insurance and pension funds, have shown a reluctance to re-enter a field that toasted them in the early 1990s.

And in terms of demographics, REITs also offer a play on baby boomers. As the aging, self-indulgent boomers become pensioners, they will likely spend more dough on fancy retirement complexes, managed, no doubt, by the REIT group.

Jordan Heller, an analyst at

Salomon Brothers

, recommends

Bay Apartment Communities

(BYA)

and

Essex Property Trust

(ESS) - Get Report

. Outside of Rainwater's Crescent, other REITs recommended include

Starwood Lodging

(HOT)

by

Sands Brothers

and

Prentiss Properties

(PP)

by

Lehman Brothers

. Also attracting attention with a recent $124 million investment in Silicon Valley is

CarrAmerica

(CRE)

.

If you don't like to choose specific investments, check out some top real estate funds, including

Morgan Stanley U.S. Real Estate

(MSUSX) - Get Report

, the

Columbia Real Estate Equity

fund

(CREEX) - Get Report

and the

CGM Realty

fund

(CGMRX) - Get Report

.

By Dave Kansas