Equity REITS Underperform Broader Market, Mortgage Reits Shine In Year To Date

REIT returns underperformed the broader equity market in November as investors concerned with rising interest rates shifted assets out of REITs and other income-oriented investments.  The shift occurred in spite of the fact that analyses by NAREIT and various investment organizations have shown that REITs typically perform well in periods of rising interest rates.

In November, the total return of the FTSE NAREIT All REITs Index, the broadest index of the U.S. REIT market including Equity and Mortgage REITs, fell 2.04 percent, the FTSE NAREIT All Equity REITs Index fell 2.42 percent, and the FTSE NAREIT Mortgage REITs Index gained 1.70 percent.  In comparison, the total return of the S&P 500 gained 3.70 percent.

In the first 11 months of the year, the FTSE NAREIT All REITs Index’s 4.88 percent total return and the FTSE NAREIT All Equity REITs Index’s 3.99 percent return also trailed the S&P 500’s 9.79 percent gain.  However, the FTSE NAREIT Mortgage REITs Index strongly outperformed the broader equity market with a 22.05 percent total return.

Similarly, in the 12 months ended November 30, the FTSE NAREIT All REITs Index gained 6.13 percent and the FTSE NAREIT All Equity REITs Index gained 5.35 percent compared to the S&P 500’s 8.06 percent gain.  However, the FTSE NAREIT Mortgage REITs Index was up 19.86 percent.

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The Nareit Media blog provides information for members of the news media on REITs, the REIT industry and Nareit. Media representatives seeking information on REIT returns, REIT performance relative to other investments, and the size and make-up of the U.S. REIT industry will find it here. Please see our Terms of Use.