REITs

While we expect both direct and indirect exposure to generate solid risk-adjusted returns, favor direct given its overall portfolio impact, lower correlation to financial assets and better inflation protection.

REITs have been climbing a wall of worry in recent years, as the group has had to overcome chronic concerns about potential supply growth and low cap rates. To be sure, the group typically experiences a boom/bust cycle. However, outside multifamily dwellings, REIT supply growth has been subdued…

With Treasury yields backing up from extremely depressed levels, many clients are asking if an overweight allocation to the REIT space remains appropriate. While a sharp spike in yields would clearly be problematic in the short run, we have shown that REITs have often outperformed during periods…

Post-Brexit uncertainty will continue for some time. But we were already cautiously positioned, and would not go any more defensive.

Investors have embraced renewed Fed hawkishness as a vote of economic confidence and confirmation of analysts' rosy earnings forecasts, but the bounce in financials looks unsustainable, outside of REITs. Hang on to gold shares.

While we recently downgraded financials and banks to underweight, this bearish view does not extend to each of the sector's components. REITs are a positive exception. The group is still not overvalued, despite the relentless decline in yields on competing assets. This may reflect an…

As world central banks increasingly shift toward negative interest rate policies to combat deleveraging and deflation, the search for yield in financial markets is likely to persist. Global bond yields continue to grind lower, which is raising the allure of income producing equities. Indeed, an…

The previous Insight showed that REITs in other parts of the world are outperforming smartly, but lagging in the U.S. We expect a re-convergence. Already a yawning gap has opened between REITs and Treasury yields (shown inverted). That is not sustainable, especially in view of positive…

Our cautious outlook on corporate profits amid ongoing deflation pressures is reason enough to favor non-cyclical equity sectors. But the surprise Bank of Japan move to introduce negative deposit rates adds yet another catalyst for defensive and fixed-income proxies. On the margin, capital is…