Looking for Low Volatility REIT Stocks

Given the surprisingly high levels of market volatility in 2011, Nem Marjanovic, vice president with Cornerstone Real Estate Advisers LLC, says he is searching for low-volatility REIT stocks.

In a video interview with REIT.com at the NAREIT headquarters in Washington, D.C., Marjanovic offered his insights into the current investing environment for REITs. Marjanovic noted that volatility impacted REITs and other equities alike. The result was a quick change in the overall market mindset in the middle of 2011.

"One of the shocking events was how quickly we went from an environment of pre-recession pricing in July, to pricing in another recession by August," he said.

The upheaval of 2011 had a broad range of effects across the global markets and has left investors and companies alike facing some "unresolved issues" in 2012, according to Marjanovic. The ongoing credit crisis in Europe continues to hang over the global economic markets.

"We haven't heard anything out of Europe in some time," he said. "No news is good news when it comes to Europe."

However, despite the lack of activity in the financial markets there, Marjanovic speculated that recent austerity measures in European countries could lead to backlashes against some governments.

"As a result, we'll probably get at least one sovereign credit default in 2012," he said. "That will have a tremendous negative impact on the markets."

Additionally, he said "geopolitical risks" in the Middle East could affect oil prices, which would hinder the global economic recovery.

On the bright side, the upcoming elections in the United States in November should have a positive effect on the economy, according to Marjanovic.

To deal with the persistent market volatility, Marjanovic said his firm has "taken a page out of the 2008 investing handbook." It is implementing an investment strategy focused on finding "low-beta" REIT stocks.