Investor Lawyers Blog
Investment fraud lawyers currently are investigating claims on behalf of investors who suffered significant losses as a result of unsuitable recommendations of real estate investment trusts, or REITs. Though the risks of non-traded REITs are now well-known, publicly-traded REITs also are not without risks. Reportedly, many investors suffered significant losses in 2013 because they were invested in these products for the wrong reasons.
Reportedly, from January until May 2013, investors spent $10.3 billion on real estate funds. However, in May 2013, the Federal Reserve began discussing tapering its purchase of assets under the so-called “quantitative easing” policy, causing a spike in interest rates, and REITs suffered a loss of 5.9 percent in that month alone. As prices fell, investors pulled $2.5 billion out of REITs, suffering significant losses. Then, last month, the Federal Reserve tapered its bond-buying program from $85 billion per month to $75 billion per month.
According to a Wall Street Journal article last month, “You should own REITs because you want to diversify some of the risks of stocks and bonds and to combat inflation — not because you are chasing high dividend yields or because you think the hot returns of the past will persist.” The articles goes on to say, “Anyone who overpays for lower-quality, higher-yielding assets could be crushed if interest rates rise sharply.”