“Real estate” is a great pick for investors wanting to somewhat insulate from the macroeconomic volatility, says Uma Moriarity – Senior Investment Strategist at CenterSquare.
Last night, Fed Chair Powell reiterated that the central bank wasn’t yet done raising rates, keeping fears of a recession in play (find out more).
In contrast, though, he also said that there was path to bringing inflation back to 2.0% without a significant economic decline. To survive such volatile times ahead, Moriarity recommends investing in REITs.
REITs have capacity to withstand volatile economic times, primarily because of the way that cash flows for REITs are structures; based on long-term leases, you see cash flows for REITs being much less volatile than equities more broadly.
“RWR” – the SPDR Dow Jones REIT ETF is already up well over 10% for the year.
Moriarity did not divulge any particular names but said selection should be based on three key factors: strength of the balance sheet, confidence in the management, and strong secular demand.
Within REITs, a sub-sector that she’s particularly interested in is healthcare rentals. In an interview with Yahoo Finance, Moriarity said:
We have an aging population that needs healthcare, whether it’s senior housing or life sciences lab space that’s developing new tech for treatments. That’s an area within real estate that has really strong secular demand drivers.
Interestingly, REITs have a history of outperforming the benchmark index when yield of the 10-Year U.S. Treasury is up significantly.
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