A reader asks: Do REITs function in an asset allocation as physical real estate does? My answer is no: The research literature indicates a very high correlation of returns between REITs and small-cap value stocks. But this podcast (6:30) “thinks aloud” about ways to import the characteristics of physical real estate into one’s portfolio, without the hardships of being a landlord. While I see no ideal solution, I would look for low-volatilty, income-oriented value investments that play out over a long time period, as physical real estate does.
