REITs outperform property investments -- but they
are riskier, according to research by the Pension Real Estate Association. The study reports real estate investment trusts have outperformed property investments since pension funds were allowed to invest in REITs in 1994. "REITs had higher returns, but higher volatility," said Greg MacKinnon, PREA's director of research. The PREA paper also found the most optimal portfolio contains a blend of private real estate and REITs.