Are REITs a Distinct Asset Class?

22 Pages Posted: 10 May 2017 Last revised: 22 Mar 2018

See all articles by Jared Kizer

Jared Kizer

Buckingham Strategic Wealth

Sean Grover


Date Written: December 6, 2017


Real estate investment trusts (REITs) are often considered to be a distinct asset class. But, do REITs deserve this designation? While exact definitions for asset class vary, a number of statistical methods can provide strong evidence either for or against the suitability of the designation. The authors step back from the established real estate and REITs literature and answer this broader question. Beginning with a set of asset class criteria, the authors then utilize a variety of statistical methods from the literature and factor-based asset pricing to evaluate REITs for their candidacy as a distinct asset class. REITs fail to satisfy almost all of the relevant criteria leading the authors to conclude that REITs, in fact, are not a distinct asset class but do deserve a market capitalization weighted allocation in a diversified investment portfolio.

Keywords: REIT, asset class, factor model

JEL Classification: G11, G12, R30

Suggested Citation

Kizer, Jared and Grover, Sean, Are REITs a Distinct Asset Class? (December 6, 2017). Available at SSRN: or

Jared Kizer (Contact Author)

Buckingham Strategic Wealth ( email )

8182 Maryland Avenue Suite 500
St. Louis, MO
United States

Sean Grover

ProShares ( email )

7272 Wisconsin Avenue
21st Floor
Bethesda, MD 20814
United States

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