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Investors pouring money into index funds are growing increasingly fond of real estate trusts—collectively holding about 15% of shares outstanding for some of the country’s largest publicly traded REITs.
Exchange-traded funds in particular hold roughly $61B of US and international REITs, the Wall Street Journal reports, including the $31B Vanguard REIT ETF, which tracks the MSCI US REIT Index and boasts yields of about 3.72%.
The majority of REIT ETFs are within retirement accounts like 401(k)s and IRAs, mostly because REIT distributions are taxed higher than dividends and capital gains. Also, REITs are fairly interest-rate sensitive —particularly non-mortgage real estate trusts—and shares have fallen in anticipation of the December rate hike. [WSJ]
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