Financial advisors are shying away from the traditional 60-40 allocation model for their clients' portfolios -- 60% stocks, 40% bonds. According to a new survey, they want a new structuring method to maintain returns and balance risk.
InvestmentNews said that about 40% of the 163 advisors who responded to the survey said they don't believe that the strategy is ideal for achieving performance and managing risk. Barely 20% of advisors even think that it is the best method.
Neal Frankle of Wealth Resources Group said the 60-40 method can't be used the way it has for the past 30 years. He uses it now with a dynamic combination of stocks and short- to mid-term bonds.
The biggest shift he's made is an allocation toward real estate. "Real estate, for the right client, is the right place now because prices are low and it can produce an income stream," he said.
Business section: investing ideas
Indeed, one increasingly preferred method or portfolio diversification is real estate, whether a house, a hotel, or an office building. But not all of us can afford to buy an entire piece of real estate, so the next best thing is REITs.
As defined by Investopedia, REITs, or real estate investment trusts, are securities that sell like a stock on the major exchanges and invest in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
There are many REITs available on the exchanges. To provide you with a starting point, we list the highest-performing REITs year to date. Will they continue their success?
List sorted by performance. (Access free, interactive tools to analyze these ideas.)
1. Newcastle Investment: Operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities. Market cap at $682.62 million; most recent closing price at $6.65. The stock has gained 43.90% year to date.
2. FelCor Lodging Trust: Operates as a lodging REIT primarily in the United States. Market cap at $529.04 million; most recent closing price at $4.46. The stock has gained 39.67% year to date.
3. CoreSite Realty (NYSE: COR ) : Operates as REIT in the United States. Market cap at $489.94 million; most recent closing price at $24.56. The stock has gained 34.93% year to date.
4. Howard Hughes (NYSE: HHC ) : Is a real estate investment and development company, engaging in managing, developing, and leasing commercial, residential, and mixed-use real estate. Market cap at $2.21 billion; most recent closing price at $60.58. The stock has gained 31.70% year to date.
5. American Capital Mortgage Investment (Nasdaq: MTGE ) : Market cap at $512.2 million; most recent closing price at $23.63. The stock has gained 28.56% year to date.
6. Apollo Residential Mortgage: Market cap at $188.61 million; most recent closing price at $18.81. The stock has gained 25.24% year to date.
7. Pennsylvania Real Estate Investment Trust: Is a publicly owned equity REIT. Market cap at $715.08 million; most recent closing price at $13.47. The stock has gained 23.84% year to date.
8. Apollo Commercial Real Estate Finance (NYSE: ARI ) : Operates as a commercial real estate finance company in the United States. Market cap at $329.74 million; most recent closing price at $16.05. The stock has gained 23.36% year to date.
9. Sunstone Hotel Investors: Operates as a REIT. Market cap at $1.19 billion; most recent closing price at $10.36. The stock has gained 22.58% year to date.
10. Brandywine Realty Trust (NYSE: BDN ) : Is a publicly owned real estate investment firm. Market cap at $1.61 billion; most recent closing price at $11.43. The stock has gained 22.10% year to date.
Interactive Chart: Press Play to compare changes in analyst ratings over the past two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
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