With global trade tensions and economic uncertainty in the headlines, US real estate investment trusts (REITs) stand out as a potentially resilient investment option. Here’s why:
Most US REITs make nearly 90% of their revenue domestically, compared to 72% for typical U.S. stocks.1 This means they’re less sensitive to global trade disruptions.
Healthcare, residential, and needs-based retail are less affected by trade disruptions, while office, lodging, and timber are more vulnerable.
They’re trading at a -2.79x earnings multiple discount to US stocks — one of the widest gaps in decades.2 Historically, when REITs have traded at a discount of -2.0x or greater, they’ve outperformed US stocks by approximately 2%-4% annually.3
Read our complete report: US REITs possess defensive characteristics amid global trade tensions and a potentially attractive valuation entry point.
With the Federal Reserve cutting rates and recent US economic data showing resiliency, the environment may be conducive to an end-of-year rally.
The US central bank, known as the Federal Reserve System, uses interest rates and other tools to keep prices stable and employment strong.
Economic and earnings data continued to point to a relatively Goldilocks backdrop for stocks and other risk assets.
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Important information
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Image: Grace Cary / Getty
All investing involves risk, including the risk of loss.
Past performance does not guarantee future results.
Investments cannot be made directly in an index.
A discount measures how much less one stock (or index) is trading compared with another stock (or index).
The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of US equity REITs.
Investments focused in a particular sector, such as real estate, are subject to greater risk and are more greatly impacted by market volatility, than more diversified investments.
Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents, or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid.
REITs are subject to additional risks than general real estate investments. The value of a REIT can depend on the structure and cash flow generated by the REIT. REITs concentrated in a limited number or type of properties, investments or narrow geographic areas are subject to the risks affecting those properties or areas to a greater extent than less concentrated investments. REITs are subject to certain requirements under federal tax law and may have expenses, including advisory and administration expenses. As a result, Fund will incur its pro rata share of the underlying expenses.
The opinions referenced above are those of the author as of June 11, 2025. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations. The opinions are based on current market conditions and are subject to change. They may differ from these of other Invesco investment professionals.
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