Washington, D.C. – An analysis of historical data by Chicago-based Ibbotson Associates demonstrates that Real Estate Investment Trusts (REITs) represent a strong source of diversification for a wide range of investment portfolios by increasing return and decreasing risk.
Ibbotson’s analysis, commissioned by the locally based National Association of Real Estate Investment Trusts (NAREIT), found that the correlation of REIT stock returns with the returns of other common stocks declined significantly over a 30-year time frame from the 1970s to the period ranging from 1993 to 2000.
According to Steven Wechsler, president and CEO of NAREIT, Ibbotson found that the behavior of REITs make a strong case for their inclusion in portfolios as a hedge against the volatility and underperformance of other securities.