Real Estate Strikes Out on Its Own in the Stock Indexes

By Paul Sullivan, The New York Times

“I’d be surprised to see what some people have talked about, that there will be much more money going in,” said Jeanette Garretty, managing director at Robertson Stephens in San Francisco. “It may be a situation of money moving away from the banking sector and following the REITs, so it looks like more money going to REITs.”

Mr. Mazza of State Street said the data showed that this is already happening. From the beginning of the year to the end of July, $6.1 billion has left financial exchange-traded funds and $6.6 billion has gone into real estate ones.

New money going into REITs, Ms. Garretty said, could come from less sophisticated investors. “For most professional managers, I’d be surprised if it’s going to change their behavior much,” she said. “But with the ongoing growth of index investing, it may lead to more individuals running their own portfolios putting money into REITs because there’s a real estate index.”

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Anthony Lindner