REITs can offer important diversification for an investor's portfolio.

The correlation of publicly traded REITs, relative to other equities, can be high in the short term, if you look over a week or a month or two.

But investors should focus on the long term.

And as your investment horizon or your hold period gets longer, and you start looking at 2, 3, 5, 10 years, those correlations of REITs and equities drop pretty dramatically.

On the other hand, over longer time frames, REITs become much more correlated with commercial real estate markets, resulting in returns from REITs that behave less like stocks and more like real property.

This is exactly what you want. That's why you own them.

It's an investment in commercial real estate.

And these companies have their own unique drivers of returns.

That means for investors a meaningful allocation to REITs and help smooth out the overall volatility of that portfolio.

At Principal, it's our team's objective to deliver consistent, attractive, risk-adjusted excess returns over the long term and investing in REITs.

As an active REIT manager, we must take risks to create alpha.

And our investment approach focuses on doing so through bottom-up stock selection, a very repeatable source of alpha generation for us.

Further, we would define ourselves as typically having a bias, or preference, towards quality in our portfolios.

We believe over the longer term, higher quality companies tend to deliver above average growth, not just in earnings, but in terms of any value added to shareholders.

We're a bottom-up manager that focuses on fundamentals to find mispriced stocks.

Our investment process goes deep in the analysis of understanding the assets that the companies own.

So we're consistently out in the field, conducting property and management team visits.

In addition, we do all our own internal valuation modeling.

Because as an active manager, we're looking for differences of opinion to capitalize on.

In building a portfolio different than the benchmark, we diversify across a relatively large number of stocks to find these sources of alpha, instead of taking a few concentrated positions.

We believe this approach allows us to potentially deliver consistent returns for our investors.

At the end of the day, our analysts do the bottom-up work, and our global portfolio managers are making the final calls.

They're comparing a hotel idea in the US, versus an office idea in Tokyo, versus an apartment idea in Berlin.

By design, the outcome we deliver, which is reflective of who we are and how we go about our work, is one of consistency and outperformance.

I encourage you to discover that advantage with Principal Real Estate.