Real Estate Looks Like It’s Hit Bottom. Let’s Buy This 8.4% REIT

Core Viewpoint - The article discusses the current investment landscape for real estate investment trusts (REITs), highlighting an opportunity to invest in a high-yielding closed-end fund (CEF) despite concerns about REITs' correlation with the broader stock market [3][4][6]. Group 1: REITs Performance and Correlation - REITs have shown a steady upward correlation with the US equity market over the past two decades, suggesting limited diversification benefits [3][4]. - Over the last 25 years, REITs have lagged behind the S&P 500, particularly during the pandemic recovery, indicating a potential undervaluation [4][5]. - Despite recent performance aligning with stocks, REITs have only captured about one-third of the S&P 500's gains in the last three years, suggesting there may still be value in REIT investments [8]. Group 2: Investment Strategy - The current yield for the SPDR Dow Jones REIT ETF (RWR) is 3.8%, compared to 1.1% for the S&P 500, making REITs an attractive option for income-focused investors [7]. - A strategy combining stocks and REITs can reduce the amount of savings needed to achieve a target passive income, such as $100,000 [7][10]. - The Nuveen Real Estate Income Fund (JRS) offers an 8.4% yield, significantly higher than RWR, allowing for a lower investment threshold to achieve the same income level [10][11]. Group 3: JRS Fund Characteristics - JRS provides broad diversification across 91 different REIT holdings, including major players like Prologis, Ventas, and Equinix [11]. - Over the past five years, JRS has outperformed RWR on a total-return basis, despite challenging market conditions for real estate [12]. - JRS currently trades at a 6.5% discount to its net asset value (NAV), a unique feature of closed-end funds that presents a buying opportunity [13][14].