Why does including REITs in a portfolio containing S&P 500 securities produce diversification benefits?
A)Real estate investment returns are highly correlated with returns for stocks
B)Real estate investment returns are not highly correlated with returns for stocks
C)Real estate investment returns are not subject to federal income taxes
D)Real estate investment returns do not change much from year to year

Question

Quizplus · Accepted Answer

Including REITs in a portfolio containing S&P 500 securities produces diversification benefits because the returns on real estate investments are not highly correlated with the returns for stocks. This means that if the stock market experiences a downturn, the real estate market may still perform well, providing a buffer to the portfolio's overall performance.

Why Does Including REITs in a Portfolio Containing S&P 500