newstreetnj wrote:Hello Friends,
Have some of the TIAA Real Estate Fund and am chagrined to see it sinking lower each quarter. Yet, REITs, in general, are doing very well. I realize that TIAA is mainly invested in commercial real estate but many REITs are too.
So, my question is why so much of a difference in performance between TIAA and the average REIT?
Thanks,in advance, for your thoughts.
If you are speaking of TRRSX, it seems to be comprised primarily or only of REITs (the top 25 of its 50 holdings are REITs) and its performance over the past couple of years has slightly outperformed its Commercial RE index while very closely mirroring Vanguard's REIT index, VGSIX...according to Morningstar.
There are some REITs (most likely those under the lights of the popular investing media) that have done quite well over the past year...but then there are REITs who have been significant underperformers, due largely to issues of the cost of credit and because commercial RE tends to lag the overall broad market.
One of the drawbacks of using an index for REITs is that the index must include the duds (like EGP and ACC) as well as the better performers.
Many who invest in individual REITs do so because CRE is a relatively slow moving and slow changing industry and REIT reporting is fairly transparent, meaning its relatively easy to spot those REITs in tight positions that will require time to correct vs. those REITs who are well structured and have stable rents.
So I don't think there is any reason to alter your position based on the slow changes in this industry index, as it is an excellent diversifier