Investors Embracing REITs

1/12/2011 | By Allen Kenney
Yield-seeking investors are gravitating towards REIT stocks and funds, according to Mark Snyderman, fund manager with Fidelity Investments.

In an interview with REIT.com, Snyderman, who oversees the Fidelity Real Estate Income Fund (FRIFX), said low interest rates have made REITs more attractive in the eyes of certain classes of investors. Snyderman's fund invests in both REIT stocks and bonds, and he said low yields on U.S. Treasuries and corporate bonds have helped push investors towards his fund and the REIT market in general.

"It seems to me that, especially over the last year or so, because interest rates have gone down so far, there's not much yield in owning Treasuries or corporate bonds," Snyderman said. "There's a lot more yield in owning REIT stocks and REIT bonds."

Consequently, Snyderman identified interest rate policy as one the most important variables affecting the REIT market going forward: "I think the low interest rates have helped REITs and have helped bonds quite a bit. If interest rates go up, I think that changes the dynamic."

Some companies are moving to take advantage of the current environment in the lending markets, according to Snyderman.

"Some of the companies that are locking in long-term financing now at historically low rates are doing a smart thing," he said.

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