Real Estate Investment Trusts average 12.4% total return in 2012 year-to-date

This week, there are a number of economic releases in the United States that will provide a report on the state of its housing market. Previous monthly releases have revealed marginal firming of housing starts and sales within the United States since late 2011.

Around the world, real estate and stock markets are synergetic with interest rates and both can be measured in performance yields.  Moreover, real estate contributes an important sector to the stock market. This is particularly the case in Singapore.

Within the FTSE Straits Times Index (STI), there are five constituents from the Real Estate Investment & Services sector, and one Real Estate Investment Trust (REIT), represented by CapitaMall Trust. The five stocks that make up the Real Estate Investment & Services sector of the STI are Hong Kong Land, CapitaLand Limited, City Developments, Global Logistic Properties and CapitaMalls Asia. Together, CapitaMall Trust and the five constituents account for almost 15% of the STI market capitalisation

In the 2012 year to date, 22 REITs listed on Singapore Exchange have provided an average total return of 12.4%. This information is provided by Bloomberg which sums price appreciation (or depreciation) and the year-to-date dividend payouts. The YTD performance of each individual REIT is discussed further in a Market Update posted on My Gateway this morning.

From a pure price perspective the average gain of the 22 REITs has amounted to 9.6%. This is lower than the performance of the STI, which has appreciated 13.7% in the 2012 YTD. The defensive nature of the REITs means their return and risk should generally be lower than that of stocks.  Last month a market update revealed that the price volatility in the first six weeks of the 2012 was one third lower for REITs than that of the STI stocks. 

Obviously REIT is not a aggresive way to earn the money. Its defensive nature always make it a safer heaven to park your money regardless economic downturn or bright times. My opinion is invest in a diversity way rather then putting all your eggs in one basket.

Don't tell me you are small investor so you cannot divest your money into different portfolio. Small investor always lose when they intend to fly high even when they cannot stand properly. Be patient, then can go big!