REITs Top Performer in Pension Fund Assets

NAREIT headquarters in Washington, DC; a report sponsored by the association sees under-allocation and outperformance among equity REITs in pension plans. (Photo: Tishman Speyer)

WASHINGTON, DC—Among pension funds’ asset allocations, publicly listed equity REITs have been the top performer, according to a study of 200 major funds from research firm CEM Benchmarking. Sponsored by NAREIT, the study found that REITs posted higher average annual net returns between 1998 and 2014 than 11 other asset groups.

Given the 11.95% annual net returns posted by the REIT category during the study period, it would stand to reason that real estate trusts figured prominently in pension funds’ allocations. In fact, the asset class has seen smaller increases in allocations than many other groups, notably hedge funds/tactical asset allocations, which grew from 1.46% of allocations in ’98 to 8.36% in ’14. Over the same time period, REITs went from 0.36% of allocation to 0.62%, representing the smallest allocation in ‘14.