TIAA-CREF Real Estate Securities Rides High on a Hot Market
This fund currently favors single family home rentals and data centers.


Real estate stocks have been on a roll. Over the past 12 months, the MSCI US REIT index gained 30.4%, which beat the 29.3% return of the S&P 500. REITs trade like stocks, but like bonds, are sensitive to interest rate swings, especially over the short term. That has been a boon to real estate securities as the stock market has soared and interest rates have stayed low. (Rates and bond prices tend to move in opposite directions.)
Will rising rates end the good times for REITs? Over the medium to long term, that’s not likely, say David Copp and Brendan Lee, managers of TIAA-CREF Real Estate Securities (symbol TCREX). That’s because rates tend to rise when the economy is doing well, says Copp, and “a strong economy is better for real estate than higher rates are bad, because revenue is growing faster than interest expenses are rising.”
Copp and Lee own a diversified portfolio of REITs and real estate securities, including real estate brokers and developers, homebuilders, property-management companies, and financial firms that make or service mortgage loans. “We’re not focused on the highest dividend payers,” says Lee. Instead, the team homes in on investments “that we think will experience the best growth in underlying cash flow and generate the highest price appreciation.” Top holdings include wireless communications infrastructure company American Tower, and Prologis, a logistics-focused real estate firm and member of the new Kiplinger ESG 20, which includes our favorite environmentally focused stocks.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Copp and Lee aren’t afraid to buy in weak subsectors if the price is right, as their stake in Simon Property Group, the largest owner of shopping malls, illustrates. Over the past year, retail REITs “were priced like people were never going to shop at malls anymore, and that’s simply not the case,” says Lee. Lately, the managers have favored firms benefiting from the economic reopening, especially apartments and regional malls. As those investments gained in recent months, they took some profits and redeployed the cash into single-family home rentals and data centers.
Over the past three years, the fund’s annualized return of 15.5% beat 90% of its peers.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Do You Really Need That Wine Cellar?
Home Features Wine cellars are a popular feature in high-end houses. Will installing one in your home increase its value, or would you be better off with a cheaper solution?
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
Stock Market Today: Investors Look on the Bright Side
A generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
Stock Market Today: Stocks Climb More Walls of Worry
Volatility is back in a normal range, and the trend for the main equity indexes remains positive despite specific and general headwinds.
-
Stock Market Today: Nasdaq Outperforms as Big Tech Rallies
The Dow Jones Industrial Average closed lower for a second day as Amgen and Merck fell.
-
Stock Market Today: UnitedHealth Drags on Dow After CEO Splits
UNH created headwinds for the price-weighted Dow on news that its embattled CEO, Andrew Witty, is stepping down.
-
Stock Market Today: Dow Gains 1,160 Points on U.S.-China Trade Deal
The two countries agreed to a 90-day truce that will give them time to work on more substantive trade negotiations.
-
Stock Market Today: Investors Weigh Weekend Negotiations
Investors, traders and speculators will look to Switzerland for answers about the most compelling issue confronting global markets.
-
Stock Market Today: Stocks Rise on Trump Trade Deal
The U.S. and the U.K. agreed to a trade agreement that includes lower automobile tariffs.
-
Stock Market Today: Stocks Rise Despite Stagflation Risk
The business of business continues apace on continuing hope for reduced trade-related uncertainty.