On March 10, 2023, Patsy McGowan was quoted in the Daily Record regarding the use of real estate investment trusts (REITS) to diversify investments in a volatile market.
“People are looking for ways to diversify out of the stock market, and REITs can offer more stability and less volatility than other stocks,” said McGowan. Despite expectations around interest rates and recession, “A lot of REITs have strong balance sheets and are well-managed, so they will feel the downturn, but not as strongly as other sectors, like technology.”
According to the article, there are literally dozens of segments that investors could consider in the REIT market. REITs can be made up of any type of income-producing property, from residential to commercial, and investors can focus on certain industries or geographies when selecting a REIT. McGowan recommended looking at the strength of the sector.
“Industrial sectors are strong, as well as data centers,” said McGowan. “Hotels are coming back post-pandemic as travel is up. Life sciences are strong, as are infrastructure—such as cell towers, energy pipelines and energy assets.”
While rising interest rates and inflation affect many portfolios, REITs can offer a more stable investment option that is not as vulnerable to changes in the economy, she said. They allow investment in real estate at scale, which dampens the impact of market fluctuations. Overall, McGowan said, REITs play a much larger role in the economy than many people realize.
“They make large-scale real estate investment accessible to the average person.”
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