U.S. REITs underperformed the broader equity market in 2013 for the first time in five years, the National Association of Real Estate Investment Trusts reported Monday. Of course, given the S&P 500’s 32.39% improvement last year, most industries had a hard time keeping up.
But in early 2014, the S&P 500 is in negative territory (-0.75%), and many ETFs with a focus on real estate have improved 2% or more.
The iShares Cohen & Steers REIT ETF (ICF), for instance, has moved up more than 3% since Jan. 1. The performance of the Vanguard REIT Index ETF (VNQ) is very close to 3% year to date.
Trading up by about 2.75% in ’14 are the First Trust S&P REIT ETF (FRI), Market Vectors Mortgage REIT ETF (MORT) and the Schwab U.S. REIT ETF (SCHH). Also, the iShares Dow Jones U.S. Real Estate ETF (IYR) has moved up roughly 2.5% in the first three weeks of the year.
“Real estate is a strategic more than a tactical investment, and real estate investors have historically been rewarded for a long-term orientation,” said NAREIT President and CEO Steven A. Wechsler, in a press release.
From 1992 through 2013, the FTSE NAREIT All REITs Index produced an average annual total return of 10.33% vs. 9.19% for the S&P 500, according to NAREIT. (A $10,000 investment in REITs at the beginning of that period would have grown to $86,965 at the close of 2013, compared with $68,128 for the same investment in the S&P 500 — a 26% greater payout.)