Real estate is an alternative asset class that is often considered a good way of increasing diversification. It can also reduce overall portfolio risk, increase returns, and provide a hedge against inflation. One form of investment in real estate is through a Real Estate Investment Trust (REIT).
A REIT is a company that owns, operates and/or finances income-generating real estate. This investment vehicle allows investors access to the benefits of owning real estate, without having to actually own the physical properties. Different REITs invest in different types of properties including apartment buildings, shopping centres, cell towers, data centres and office blocks, among others.
To be qualified as a REIT, a company needs to meet certain criteria, including the amount they pay their investors in the form of dividends. In the US specifically, if a company is qualified as a REIT, it will be taxed less aggressively than a traditional company. Its shareholders are, therefore, able to enjoy lighter taxations when compared to traditional stock investment.
The process of selecting assets for the portfolio is as follows: First, the universe of stocks available on eToro is scanned for US-based companies that fit into the REIT landscape. Then, each stock undergoes a screening process based on a series of metrics, such as market capitalisation, liquidity of the shares, financial ratios and analysts’ consensus ratings. The top 40 stocks are selected for the portfolio with the aforementioned metrics forming the basis for the stocks’ weighting.
Mena is a leading company that provides various professional services in the real estate market & property sales. With an experienced & capable team to advise & create solutions for all management departments, we produce optimum results. We consider the real estate trends, economic and social trends, governmental controls or regulations and environmental conditions to know their demand, utility & scarcity before buying or selling a property. We examine the property’s potential & enhance the Client’s success.