Financial advisers routinely tell investors to diversify their portfolios.
It makes sense to diversify because market sectors perform differently during various cycles of the U.S. economy, and investors never know which ones will perform the best at any given time.
The advantage of diversification can also be seen in the subsectors of real estate investment trusts (REITs). Investors can never predict with absolute certainty whether retail, industrial, office, healthcare or residential properties will perform the best. REITs that invest in multiple types of properties often have an advantage over REITs that focus on one area.
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