Why real estate belongs in your portfolio

This year’s big winner in the stock market has been commercial real estate: a surge of 12.8% at the average mutual fund investing in real estate investment trusts (REITs). That’s the group’s sixth double-digit gain in seven years.

But the very success of real estate raises the specter that a correction is due. In addition, the Federal Reserve has its hands around the economy’s neck, trying to wring the exuberance out, and landlords go broke when the economy faints.

At least two factors argue in favor of real estate, though. The first is that recessions have become shorter and milder in recent decades, as the Fed gets better at calibrating its actions.

“The Fed is increasing rates in an effort to engineer a steady-growth economy, and commercial real estate can thrive exceptionally well in that (environment),” says David Lee, manager of T. Rowe Price Real Estate (TRREX).

Secondly, a mountain of cash has been building up on the sidelines amid today’s chaotic markets, and some of it is destined to cascade through the property sector.

“Our belief is that there is in excess of $100 billion of capital, including leverage, that’s waiting to be invested in commercial real estate,” says Barry Vinocur, publisher of REIT Wrap, a daily e-mail newsletter focusing on the group. The total capitalization of the REIT sector is only $341 billion.

I have long been an advocate of real estate funds for income investors, and I own one in my model portfolio of exchange-traded funds. But I’m increasingly bullish on a role for real estate in an equity fund portfolio. I think it’s likely that REITs will outperform the stock market for at least the next three to five years, and probably longer.

Top 10 Ways to Live Forever

No drugs. No bypasses. No scars. Just solid DIY advice on how to keep your heart pumping.

1. Grill a steak. You may think it’s bad for your heart, but you’d be wrong. Beef contains immunity-boosting selenium as well as homocysteine-lowering B vitamins. And up to 50 percent of the fat is the heart-healthy monounsaturated variety.

2. Tell your wife to butt out. People who are exposed to cigarette smoke for just 30 minutes, three times a week, have a 26 percent greater risk of developing heart disease than people who rarely encounter secondhand smoke.

3. Take aspirin. Regular aspirin consumption cuts the risk of coronary heart disease by 28 percent in people who have never had a heart attack or stroke.

4. Drink more tea. Men who drink 2 cups of tea a day are 25 percent less likely to die of heart disease than guys who rarely touch the stuff. The reason: flavonoids in the tea, which not only improve blood vessels’ ability to relax, but also thin the blood, reducing clotting.

5. Touch her. Ten minutes of skin-to-skin contact (hand-holding, hugs) with your mate can help keep your blood pressure and pulse from spiking during stressful times, according to University of North Carolina researchers.

6. Go fishing for tuna. Omega-3 fats in tuna help strengthen heart muscle, lower blood pressure, and prevent clotting — as well as reduce levels of potentially deadly inflammation in the body.

7. Pair up. Married men are less likely to die of heart disease than bachelors. Scientists looked at men with mildly high blood pressure and found that after 3 years of marriage, the happily married men had healthier hearts than their unmarried brothers.

8. Adopt a dog. All that love (“You’re a good boy, yes you are!”) and aggravation (“Bad dog! Don’t eat Daddy’s crab dip!”) makes your heart more adaptable and better able to deal with the stress that can lead to heart disease.

9. Rinse, brush. Rinse your mouth with mouthwash and toothpaste that has antibacterial properties. They’ll reduce oral bacteria, which can decrease your risk of a heart attack by 200 to 300 percent.

10. Make friends at work. Men with the most work friends also have the lowest heart rates and healthiest blood-pressure levels, even during times of stress.

By the Editors of Men’s Health