So, news: the S&P 500 have done a re-classification with effect from yesterday. REITs (or Real Estate Investment Trusts) are no longer going to be classed with the rest of the Financials sector. Instead, they’re getting there own category. In practice, this will mean:
- Newer types of exchange-traded funds
- Buzzier headlines for journalists
- A bit of a rebalancing act for the funds that were investing in indices attached to the Financials sector.
But I do have some more long-term concerns. I found this:
New inflows into REITs mean that:
- You’ll get a whole bunch of new REITs entering the market, collecting funds and buying up properties (possibly causing a bit of a property price bubble); and/or
- The price of REITs will spike, driving down yields. Which is good for current REIT investors – but it’s also a bit bubbly.
If you’re still wondering what a REIT is, here’s a helpful infographic:
I’d bore you all with a rinse and repeat of the same concerns that I’ve had before – but because I’m running out of time this morning, I’m instead referring you to the older posts where I’ve written about them:
- Let’s Talk About South African REITs. Because they do so well.
- South African REITs: What Are They?
- South African REITs: The Investment Conversation
- Listed Property: Cometh The Crash?