Co-Produced By The Belgian Dentist for The Income Strategist
REITs are typically considered a “good inflation hedge.” They own tons of real estate whose values increase along with inflation. However, due to the strong short-term relationship between prices on equities and REITs, REITs show to not be a strong inflation hedge in the short run.
Over the long term, REITs do become more correlated with property returns and offer more inflation hedging capabilities, but not all REIT sectors offer the same level of inflation hedge due to the characteristics of the underlying leases.
For example,