Australian Investment Blog

The REITS march on as Banks tread water, the trade for 2014?

Over the last 3 months the banking sector has gained a meagre 0.3%, whereas the real estate sector is up an impressive 5.4%. I believe this overall reflects the market’s current insatiable search for yield and the fact that banks are basically fairly priced. The Australian banks are trading within 3% of all-time highs, whereas the “REITS” (Real Estate Investment Trusts) are lucky to be trading at 50% of their all-time highs – It’s easy to see why the ASX200 is trading 20% below all-time highs, whereas the S&P500 continues to make fresh highs. The disadvantages of REITS are:

REITS are exposed to increasing interest rates which is inevitable, the only question is when.