Real Estate Securities

Real Investment Opportunities

Real estate may provide income and diversification to a well-rounded investment portfolio - even for the average investor. But what is the best way for an individual to invest in real estate? You may own a home, but that doesn’t provide you with a steady stream of income. You may own a rental property, but that doesn’t provide you with diversification.

Meet the "REIT"
One way to participate in the investment potential of real estate is through real estate securities, such as Real Estate Investment Trusts (REITs). REITs are companies that own, and often operate, income-producing real estate such as offices, shopping centers, and apartment buildings. REITs were authorized by Congress in 1960 as a tax-efficient vehicle to permit investors to take advantage of the income and growth opportunities of large commercial real estate ventures.

Potential Benefits of REITs

Current income and long-term growth. One of the requirements for a company to qualify as a REIT under the law is that 90% of its annual taxable income must be distributed to shareholders as dividends. This means that REITs tend to pay relatively higher dividends on their equity securities than other types of companies. Over the long term, REITs also offer the potential for capital appreciation.
Portfolio diversification. Real estate securities can be a valuable portfolio diversifier due to its low correlations with traditional common stocks and bonds. A low correlation, means that the securities do not typically move in tandem. Investing in non-correlating securities could add a degree of stability to a well diversified investment portfolio. Keep in mind, however, that diversification does not assure a profit nor protect against a loss during broad market downturns.

Investing in REITs
A convenient way to add real estate to your portfolio is through a mutual fund that invests in REITs. As with other types of mutual funds, a fund that invests in REITs offers you the advantage of professional managers, who carefully select and closely monitor the REITs in the fund’s portfolio. Your financial advisor can help you decide if real estate securities are right for you, and help you select an appropriate mutual fund to seek your real estate securities investing goals.

Real estate investments may be subject to specific risks, such as risks to general and local economic conditions, and risks related to individual properties. Investing in one economic sector, such as real estate, may result in greater price fluctuations than owning a portfolio of diversified investments. Smaller company stocks may experience larger price fluctuations than large-company stocks or other types of investments.

Diversification does not ensure a profit or protect against loss in a declining market.

Stock prices fluctuate, and you could lose money. Fixed income securities are subject to interest rate risk, credit risk, prepayment risk, and market risk. High-yield securities are subject to a greater risk of loss of principal and interest than higher-rated, investment grade fixed income securities.

This information is for general educational purposes only. Neither RiverSource, nor its affiliates or representatives, provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding US federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Retirement plan withdrawals made prior to age 59½ may be subject to taxes and a 10% penalty.

You should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. To learn more about this and other important information about the funds, download a free prospectus. Read the prospectus carefully before investing.

RiverSource^®, Seligman^®, and Threadneedle^® mutual funds are part of the RiverSource family of funds, and are distributed by RiverSource Fund Distributors, Inc., Member FINRA, and managed by RiverSource Investments, LLC. Threadneedle mutual funds are subadvised by Threadneedle International Limited. RiverSource and Threadneedle are part of Ameriprise Financial, Inc. Seligman is an offering brand of RiverSource Investments.

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