Again, Buffett is a special case, but I think you get my point. Even a 2% dividend yield turns into a yield on cost of nearly 7% when compounded at 10% per year for two decades. If the stock price keeps up with these growth rates, it’s also a blessing for one’s total net worth.

• What’s your risk profile? I have met people who have lost sleep over a 25% equity fund. I also know people who have the overwhelming majority of their multi-million net worth in crypto, tech stocks, and real estate, who don’t even break a sweat when things go down 20-40%. On top of prudent financial planning (what do I need in the future?), it’s a mindset thing.

See, the higher the risk, the higher the return. An “aggressive growth” portfolio of 85% equities returns close to 10% per year, historically speaking. However, during really bad recessions, it can temporarily lose more than half of its value (Great Financial Crisis).

A portfolio of 20% equities returns less than 6.0% per year. However, the odds of a steep decline are super low, as we can see below. Then there’s anything in between.

Interestingly enough, though, on a long-term basis, the odds of losing money with an aggressive stock portfolio are zero. Since the inception of the stock market in the U.S., nobody has ever experienced negative returns on a 20-year basis.

Could it change? Yes. Is it likely? No.

This is one of the reasons why I’m an “equity guy.” Instead of bonds, I would rather buy bond-like stocks like utilities, consumer staples, and REITs, which brings me to the next part of this article.

The 4 Stocks I Would Trust As A Core

Last month, I wrote an article titled “The Only Retirement Investing Strategy I Would Trust With My Future.” It was about building core holdings that bring income and stability. Once that has been taken care of, investors can use smaller holdings to increase their return or income profile. Right now, these could be investments in AI, the energy transition, economic re-shoring, or other ideas.

For most people, the core should consist of ETFs, as these provide the best diversification benefits. By buying 2-3 ETFs, investors can buy high-yield dividend income, bonds, and even higher-growth dividend stocks like the Vanguard Dividend Appreciation ETF (VIG).

As I do not invest, I would buy ETF-like companies with diversification benefits, wide-moat business models (or other benefits), and the ability to provide consistently rising income.

In my case, I would aim for an average yield of 5.0% to 5.5%, which is a rate that has various benefits:

• If I were to achieve this return, I could retire without having to buy high-risk income stocks.
• By aiming for a mid-single-digit dividend yield, we can also incorporate lower-yielding dividend growth stocks.
• Essentially, falling for a “sucker yield” is much harder in this area. If I were forced to buy double-digit income to fund my retirement, the story would be different.

Right now, my core would definitely include ONEOK (OKE), a company I have brought up in a number of articles this year. ONEOK is a C-Corp midstream company that does not issue a K-1 form. It owns a massive network of pipelines and related support operations in areas like the Permian Basin, where it generates substantial income in fast-growing markets like natural gas liquids, natural gas gathering/processing, and refined products (see below).

Like most companies, its revenues are mostly coming from fixed-fee contracts. That’s one of the biggest benefits, as these companies are not directly dependent on the price of oil, gas, and related commodities. As a result, ONEOK has grown its EBITDA for more than 10 consecutive years with a >16% CAGR since 2013. This includes the 2014/2015 oil crash, the 2020 pandemic, as well as the current oil and gas price weakness.

Through at least 2026, the company aims for mid-to-high single-digit annual EPS growth.

Currently, OKE yields 5.8%.

Its dividend has not been cut for at least 25 years and is expected to grow by 3-4% per year.

Interestingly enough, the yield is only so high because of recent stock price weakness. The company trades 40% below its 52-week high, as a result of weak oil prices. While this does not directly impact its revenues, the market has started to fear that prolonged subdued prices could hurt output. So far, this has happened every time during downturns and provided great opportunities.

Then there’s Getty Realty (GTY), a company I have never brought up. It has a yield of 6.9%, a payout ratio of slightly less than 80%, and is one of the biggest owners of convenience and automotive retail assets. This includes auto service centers, drive-through restaurants, and car washes in high-demand areas.

Although some of these areas have elevated competition (think of car washes), the company has an excellent track record of occupancy (99.7% as of 2Q25), rent collection, and tenant rent coverage. This allowed it to grow its dividend by 5.1% per year since 2019.

It also has an investment-grade credit rating, a net leverage ratio of 5.2x, and an average weighted lease duration of a full decade.

Another REIT I would add is VICI Properties (VICI), the owner of major Las Vegas Strip properties like MGM Grand, Caesars Palace, Park MGM, Mandalay Bay, New York-New York, and others. It has a triple net lease business model and 100% rent collection.

Moreover, roughly half of its revenue is generated outside of Las Vegas, as the company is consistently diversifying into other entertainment areas with strong tenants, pricing power, and secular growth. See, while AI is disrupting the world, hard assets and entertainment are two areas I expect to thrive, as people want to enjoy life and spend on experiences.

With that said, while Las Vegas is under fire from plunging visitor numbers that have triggered layoffs, I believe there is no risk to VICI, as the city suffers from a mix of weak consumer sentiment and the fact that most resorts have used premium pricing to boost margins.

The biggest risk is for the resort operators to bring back customers. All will rely on their assets. This shields VICI and its investors. It also makes for a better yield, as VICI now yields 5.7% with mid-single-digit annual dividend growth.

Last but not least, I would add PepsiCo (PEP), a company I owned from 2020 until I sold it to free up cash for my Albania investment a few months ago (see this article). Currently yielding 4.0%, the company has been targeted by Elliott Management to improve its business.

The company, which owns some of the world’s most favorite snacks and drinks (think of Lay’s and Pepsi), is the biggest snack player in the world, with at least 20 billion-dollar brands that compete with companies like Coca-Cola (KO).

Because of somewhat underwhelming growth and pressure on margins in recent years, the poor stock price performance has created the biggest discount in at least two decades, as we can see below. Trading at just 18x earnings, it trades at least four points below its long-term average.

Now, Elliott sees a path to long-term double-digit earnings per share growth, which could benefit investors through higher earnings growth and a higher valuation. In the near-term, it sees upside of at least 50%, something I entirely agree on.

Even better, because of its diversified business model, PepsiCo has always been one of my favorite consumer staples and a prime stock for a retirement account.

That’s also why I believe we could see consistent dividend growth in the 6-8% range.

To me, PepsiCo is now a Strong Buy.

Putting everything together, these four picks have an average yield of 5.6%, a fantastic number in light of growth potential and safety.

I look forward to your view on this, and I can tell you I will continue to build on this portfolio, as I have a lot more ideas I didn’t mention in this article.

For now, this is my takeaway:

Takeaway

I’m never retiring. At least, if it’s up to me.

However, that doesn’t mean focusing on retirement investing isn’t super important, especially as we are dealing with a wide range of risks like “higher for longer” inflation, the Silver Tsunami creating Social Security headwinds, and massive AI disruption.

That’s why I’m better safe than sorry when it comes to preparing for retirement.

In this article, I discussed four stocks I would make the core of my retirement portfolio, as they deliver an average yield of slightly more than 5.5%, healthy payout ratios, solid balance sheets, and business models that should provide me with inflation-beating dividend growth.

In the weeks and months ahead, I’ll provide more ideas and look for ways to incorporate more growth in a retirement portfolio, a subject I believe is often neglected

REITs For A Rate-Cut Rebound: My Top 5 Picks

Sep. 25, 2025 4:20 PM ET HST, NHI, XHR, STAG, VICI

Steven Cress, Quant Team

Summary

• The real estate sector and REITs stand to gain from Fed easing.
• Lower mortgage rates are expected to boost homebuying, while reduced financing costs could bolster commercial property values.
• CBRE projects commercial real estate investment volume to increase by 15% in 2025, raising its forecast by 5% after the Fed rate cut.
• According to a CenterSquare investment strategist, institutional investors have been waiting for this type of easing monetary policy environment to deploy assets into real estate.
• SA quant identified five Strong Buy REITs poised to benefit in a rate-cutting cycle, with solid investment fundamentals, FFO generation, and high dividend yields.
• I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them.

Is Real Estate Ready For A Rebound?

Residential and commercial real estate companies and real estate investment trusts (REITs) could stand to gain from the latest interest rate cutting cycle, which began earlier in September with similar cuts expected for October and February. Lower mortgage rates make houses more affordable and are likely to spur homebuying, while lower borrowing costs could prop up commercial property values, leading to more sales and lending.

In a recent article, I highlighted how the 25 basis point cut may boost some sectors, offering consumers an opportunity to finance at lower rates. The commercial side of real estate may see the benefits of lower rates much more quickly, unlike home mortgages, which do not track the Fed’s moves directly. Much of commercial real estate is financed with shorter-term or floating-rate loans, which are more sensitive to interest rate cuts.

In the wake of the 2022 hikes, commercial property values fell over 20%, sales sank, and banks stopped lending. After the Fed announced the initial cut on September 17, real estate giant CBRE revised its forecast upward, citing lower borrowing costs. CBRE now projects commercial real estate investment volume to increase by about 15% in 2025 – up from its earlier projection of 10%.

Falling short-term rates alone may not be sufficient for a full recovery if the 10Y Treasury yield remains elevated, keeping long-term financing costs high. Add to that risks and uncertainties from tariffs, stubborn inflation, and a softer labor market. That’s why investors should focus on REIT fundamentals – stocks with consistent operating results, reasonable valuations, and reliable dividends.

REITs Primed For A Rate-Cutting Cycle

Although real estate has underperformed the market in the past year, lower interest rates could spur capital inflows. According to CenterSquare investment strategist, Uma Moriarity, institutional investors have been waiting for this type of easing monetary policy environment to deploy assets into real estate. Moriarity also said that, historically, REITs tend to outperform core private real estate once the Fed starts a rate-cutting cycle. In fact, REITs had begun showing momentum ahead of the Fed rate cuts, with the FTSE Nareit All Equity REITs Index rising 3.3% in August.

Health care has been the highest performing REIT sector year-to-date, with a total return of 21.3% – followed by diversified and gaming. Despite a rough market, REIT operating performance in Q2 2025 remained resilient, as they continued to deliver year-over-year growth in net operating income (NOI) – led by industrial REITs (+23.6% YoY).

In addition to gaining a foothold in a sector that could benefit from interest rate easing, REITs can be a defensive haven when the market is volatile, due to their stable dividend income, tangible asset backing, and inflation-hedging properties. With these objectives in mind, SA Quant screened for high-yield REITs with exceptional fundamentals and found five poised to perform in a low-rate environment.

Top 5 REITs

SA Quant identified five Strong Buy commercial REITs that own a wide variety of properties, including hotels, casinos, senior housing, and industrial warehouses. The stocks on the list have outstanding collective investment fundamentals, robust FFO generation, and high earnings growth potential. The stocks also offer safe and high-yielding dividends, providing investors with downside protection in a volatile market.

1. Host Hotels & Resorts, Inc. (HST)

• Market Capitalization: $12.10B
• Quant Rating: Strong Buy
• Quant Sector Ranking: (as of 9/25/25): 4 out of 176
• Quant Industry Ranking: (as of 9/25/25): 1 out of 15
• Sector: Real Estate
• Industry: Hotel & Resort REITs

Host Hotels & Resorts, the only S&P 500 lodging REIT, has ridden the post-pandemic leisure and travel rebound to deliver strong growth in revenue, FFO and AFFO – while offering investors stability with a reliable and growing dividend. The top quant-rated Hotel & Resort REIT, HST, has a portfolio of 80 hotels under major brands like Marriott, Hyatt, and the Four Seasons – concentrated in high-demand markets. By consolidating its focus even further on higher-end properties in recent years, Host has benefited from substantial out-of-room revenue from both guests and non-guests.

Higher room rates across the portfolio and greater spending on food, beverage, and services drove Q2 revenue, up 8.2% year-over-year to $1.59B, and helped HST beat earnings for the sixth straight quarter. Healthy transient leisure demand and the continuing recovery in Maui more than offset a decline in group demand, while improvements in room rates offset rising wage expenses. HST lifted full-year EBITDA and revenue guidance, citing outperformance in H125, hotel operational improvements, and expected growth in Maui.

HST’s FFO has surged by a CAGR of ~47% in the past 3 years, driving an A Growth Grade, while exceptional interest and dividend coverage ratios underpin a quality profitability score. HST also offers a stable and rewarding dividend, sporting a yield of 5.18%. Impressive payout ratios support the company’s ‘A’ Dividend Safety Grade while a 3Y CAGR of 115% contributes to a top-notch Dividend Growth Grade. HST’s dividend consistency grade took a hit after the company suspended payouts in mid-2020, preserving cash as it dealt with the fallout from the pandemic. Host’s dividend has grown steadily since it was reinstated in early 2022.

HST is trading at an attractive valuation – with a price-to-FFO of 8.7x – representing a 35% discount to the sector’s 13.4x. HST provides investors with a great opportunity to play the high-end travel boom, backed by premium asset positioning, improving momentum, and a high-quality dividend – all at an attractive price.

2. National Health Investors, Inc. (NHI)

• Market Capitalization: $3.77B
• Quant Rating: Strong Buy
• Quant Sector Ranking: (as of 9/25/25): 7 out of 176
• Quant Industry Ranking: (as of 9/25/25): 1 out of 17
• Sector: Real Estate
• Industry: Health Care REITs

An aging population and surging demand for senior housing have created powerful tailwinds for National Health Investors, Inc. (NHI), SA Quant’s top-rated Health Care REIT. With senior housing representing two-thirds of NOI, National Health Investors is positioned to benefit from long-term demographic trends. The 85+ population growth rate is expected to accelerate to a CAGR of 1.9% by 2030 and 3.5% in the following decade. On the supply side, inventory growth has dropped below 1% while new starts in Q2 2025 were the lowest level ever recorded – and 64% below the historical average.

Boosted by these dynamics, NHI delivered better than expected Q2 results, with NOI surging nearly 30% to $3.8M, primarily due to increased revenue from higher occupancy levels and revenue per occupied room. Excellent year-over-year growth in its Senior Housing Operating Portfolio, or SHOP, and continued collections on deferral repayments also drove outperformance. Looking ahead, NHI said it has $750M in liquidity and capital resources to continue executing on a $350M pipeline – which is nearly entirely focused on senior housing.

Improving momentum in the past 3 months, along with rising earnings and upward EPS revisions, has bolstered NHI’s Strong Buy Quant Rating. Robust AFFO is driving NHI’s ‘A’ Profitability Grade. NHI’s FFO growth has improved in the last 12 months and is projected to rise steadily in each of the next three years, according to consensus estimates.

NHI offers a safe and consistent dividend, yielding 4.63%, with 33 consecutive annual payouts. Growth has lagged, but NHI increased its dividend for the first time in four years – a payout of $0.92 per share will be distributed in Q3. NHI is trading at a premium to the sector with a P/FFO of 16.50x – but positive tailwinds, a safe dividend, and stellar margins, still make it a Strong Buy stock.

3. Xenia Hotels & Resorts, Inc. (XHR)

• Market Capitalization: $1.46B
• Quant Rating: Strong Buy
• Quant Sector Ranking: (as of 9/25/25): 8 out of 176
• Quant Industry Ranking: (as of 9/25/25): 2 out of 15
• Sector: Real Estate
• Industry: Hotel & Resort REITs

XHR has crushed the real estate sector in the past three months, up more than 15%, boosted by quality financial results across its 30-hotel portfolio and three demand segments, which include Group (~35% of revenue), Corporate Transient (~40%), and Leisure Transient (25%). XHR’s Q2 revenue of $287.58M (+5.4% YoY), beat expectations by $14.23M, and adjusted FFO per share rose 9.6%, resulting from strong group business demand, a recovery in corporate transient, and normalization in leisure.

Xenia’s Q2 performance was driven by sturdy revenue from the recently renovated Grand Hyatt Scottsdale Resort, substantial food and beverage sales portfolio-wide, and outsized gains in its highly-profitable catering business. XHR has delivered amazing FFO growth in the past three years, up by a CAGR of 78% to outperform the sector. And XHR’s outlook is impressive, with Wall Street analysts projecting earnings to grow by 9% in FY25.

Strong reinvestment and FFO dividend coverage ratios, are driving a solid profitably grade. Trading at 8.3x FFO, XHR is at a significant discount to the sector for a ‘B’ Valuation Grade. XHR offers a safe dividend, yielding 3.89%, that has delivered long-term growth. With an attractive price, outstanding growth, and accelerating momentum, XHR is another Strong Buy hotel REIT for your portfolio.

4. STAG Industrial, Inc. (STAG)

• Market Capitalization: $6.52B
• Quant Rating: Strong Buy
• Quant Sector Ranking: (as of 9/25/25): 10 out of 176
• Quant Industry Ranking: (as of 9/25/25): 1 out of 13
• Sector: Real Estate
• Industry: Industrial REITS

#1 among quant-rated Industrial REITs, STAG boasts 600 properties in 41 states – totaling 118.3M square feet – and has seen positive momentum after it beat earnings for the eighth straight quarter in Q2. STAG has delivered substantial growth and profitability in the past year as conditions improve in the medium-sized warehouse market.

STAG has already leased 90.8% of the square feet it expected to lease in 2025, while achieving cash leasing spreads of 24.5% in the second quarter. STAG has seen a recovery in demand and tightening supply as trade tensions dissipate and businesses look to diversify supply chains, which CEO William Cooker elaborated on in the earnings call:

In the first quarter, news related to the global trade war drove significant market volatility. Broadly speaking, today, the theme has shifted to a general desensitization to tariff headlines. We are witnessing businesses continue to grow and make corporate decisions in an uncertain environment, a change to the broad pause seen in the past 12 months. While it’s certainly not business as usual, users cannot delay space decisions in perpetuity, and supply chain diversification remains a priority for many companies.”

STAG has posted steady growth in operating revenue and return on equity, showcases impressive profit margins, and offers a safe and consistent monthly dividend with a yield of 4.30%. The stock is trading in line with the market with a 13.81x P/FFO ratio, but improving earnings growth projections and strong all-around investment fundamentals offer great exposure to a recovering industrial REIT market.

5. VICI Properties Inc. (VICI)

• Market Capitalization: $34.01B
• Quant Rating: Strong Buy
• Quant Sector Ranking: (as of 9/25/25): 11 out of 176
• Quant Industry Ranking: (as of 9/25/25): 1 out of 12
• Sector: Real Estate
• Industry: Other Specialized REITs

VICI’s stock slid after Las Vegas reported a sharp drop in visitors in July, creating a potential buy-the-dip opportunity. VICI generates significant revenue from the Las Vegas strip – where it owns three iconic hotels – Caesars Palace, MGM Grand, and The Venetian. However, VICI also derives revenue from about 90 other experiential assets in the US and Canada. VICI is now trading at a 12% discount to the sector, at 11.7x FFO, which is attractive given the stock’s exceptional collective investment qualities, high earnings growth upside, and sturdy dividend yield.

Moreover, the rate cut could benefit VICI by lowering refinancing costs, making it even more of a value play, according to SA Analyst Steven Fiorillo:

They have world-class assets that could increase in value as property values increase and rates decline. VICI could also further reduce its carrying costs by refinancing additional debt at lower rates and improving its margins as less capital flows toward interest expenses… As the year progresses, I think that shares of VICI can continue to move higher while rewarding investors with a dividend yield that exceeds risk-free assets.

VICI’s FFO margin of nearly 70% is helping fuel its A+ Profitability Grade, while year-over-year and long-term growth in AFFO and FFO are crushing the sector. VICI’s Dividend Scorecard is solid across the board – with B’s in safety, growth, yield and consistency. Showcasing a yield of 5.64%, VICI’s dividend has grown by a CAGR of 7% in the past five years. The gaming REIT has delivered six consecutive years of dividend payments and growth since going public in 2018.

VICI is the final pick on our diverse list of Strong Buy REITs – a great stable of stocks that possess excellent underlying investment fundamentals, dividends you can depend on, and exceptional earnings growth upside relative to the real estate sector.

Conclusion: Top 5 REITs Poised For A Rate-Cut Rebound

The real estate sector stands to gain from interest rate cuts, with lower mortgage rates likely to stimulate homebuying, as lower borrowing costs stabilize commercial property value. REITs tend to perform well during interest-rate cutting cycles, and experts say institutional investors have been waiting for this type of monetary policy environment before deploying assets into real estate. SA Quant identified five commercial REITs with Strong Buy Quant Ratings across a wide range of industries, which have generated strong FFO.

The great Reit fire sale – where to find the best value© Getty Images

The real-estate investment trust (Reit) segment of the UK equity market has been on life support for much of the past five years, and it’s easy to understand why investors have decided to give the sector such a wide berth.

Reits are a diverse bunch and in reality many were able to navigate through these challenges without too much difficulty. But investors didn’t wait around. The sector’s difficult outlook, coupled with investors’ general desire to sell anything listed in London, heaped selling pressure on the shares.

Investors have continued to avoid the sector despite a general recovery in the market, even though it’s becoming desperately clear the sector is deeply undervalued. That’s a fair statement to make as it is easier to determine the underlying value of Reits than of most other companies.

Determining what Reits are worth

Investors can either use the published net asset values, or use yield as a proxy for underlying cash flow to determine the value of Reits. A combination of both is probably the best strategy.

This is where the yield comes into play. The vast majority of the total return from real estate over multiple decades is income. The value of the property can rise and fall, but the income is always there, so understanding how much income an asset can generate and the quality of that income is key. This in turn feeds back into the valuation of any asset.

Purpose-built properties with high-quality tenants on long-term inflation-linked leases are generally going to be worth much more (and maintain their value better) than smaller properties let to small shops on short-term leases.

Two-thirds of the group’s portfolio consists of industrial assets such as Parkbury industrial estate – occupancy here is 99% and demand for the space is so high that tenants are paying up to stay. It was able to push through rent rises of between 8% and nearly 40% last year, in situations where leases were coming up for renewal.

Despite these quality income streams, the trust is trading at a deep discount to its 100p per share net asset and buyers are taking notice. Over the past few years, Picton has sold a clutch of office properties at an average premium to book value of 5% and these weren’t even the company’s best assets. Picton now finds itself in a strange position.

It has an attractive portfolio of real estate generating attractive income streams that buyers are willing to pay a premium for and its gearing is low at 24%, with debt fixed at an interest rate of 3.7%, but the market doesn’t seem interested. One group of buyers, however, is taking notice.

Private equity pricks up its ears

Equity investors might not be interested in UK Reits, but corporate and private-equity buyers are both taking advantage of the opportunity. In mid-2022, there were 73 real-estate companies listed on the London Stock Exchange, according to figures compiled by the Association of Investment Companies (AIC).

In the three years since, 17 have been lost to mergers or deals that have taken the companies private; 14 have wound up or are winding up, or have put themselves up for sale, leaving just 42 listed companies – a decline of 42%.

Some of the sector’s largest players have moved to swallow up their smaller peers. The synergies achieved from any deal are usually relatively small in comparison to the values involved. Instead, Reits are seeking scale to fend off predators and reduce their cost of capital, as well as to appeal to a larger audience of investors.

Take LondonMetric (LSE: LMP). In the past three years, it has acquired three other Reits, including LXi Reit, Urban Logistics Reit and CT Property Trust. The deals have catapulted the trust into the FTSE 100, making it one of the UK’s largest corporate owners of UK real-estate property assets.

However, questions are now growing around the trust’s exposure to Merlin Entertainments, the private-equity-backed theme park operator. Merlin’s losses are spiralling, and 10% of LondonMetric’s rent roll is tied to its theme park assets. The market is watching this situation closely.

The other major consolidation deal in the sector this year was Primary Health Properties’ £1.8 billion acquisition of Assura. PHP outbid private-equity giant KKR and, assuming the merger clears the recently announced competition investigation, the deal will create a healthcare-focused behemoth with nearly £3 billion of assets.

Between them, the two groups generated rental income of £333 million last year, close to 85% of which is underpinned by revenues from the UK and Irish governments.

Private equity failed to crash PHP’s party, but that was the exception, not the rule. At the beginning of September, Blackstone emerged victorious in a months-long battle to take over Warehouse Reit after rival bidder Tritax Big Box Reit (LSE: BBOX) withdrew its offer.

Meanwhile, KKR has been in talks with build-to-rent provider PRS Reit, although PRS has now accepted an offer from another bidder. PRS owns the largest build-to-rent single-family home portfolio in the UK, with 5,443 completed homes as of 31 March 2025. The company put itself up for sale earlier this year following a strategic review.

PRS is a case study in what’s gone wrong in the UK market. Despite reporting near-full occupancy quarter after quarter, a consistent rent-collection rate of 100% and a steady dividend yield of 4%-5%, the stock has continued to trade at a discount of 20%-40% of the group’s net asset value.

Soon after it put itself up for sale, an offer emerged from Long Harbour (a property management firm) valuing it at 115p, or £631.6 million, around its current share price at the time, but still below the NAV at the end of December of 139.6p. In mid-September, the company announced it had agreed the sale of the PRS Reit Holding Company, its operating subsidiary that holds the entirety of the Reits portfolio of property assets for Waypoint Asset Management for £633.3 million after fees.

The company has said when the deal closes it will liquidate and return assets to shareholders as fast as possible.

Year-to-date, the Reit sector has traded at an average discount to NAV of 28%, while many buyout offers have come much closer to NAV. Such deals help justify the NAVs: they show the values presented are not overinflated or unrealistic. They are, in fact, an excellent gauge of what the private market is willing to pay for these assets.

They also show the vast gulf between private- and public-market views of the sector and its underlying assets. This suggests there’s an opportunity for investors who are willing to dig into the weeds to find the assets worth paying for in the sector.

Where to find the best value

As noted above, investors need to consider both the quality of a company’s portfolio income as well as the NAV when trying to determine how much one of these businesses could be worth.

Picton (LSE: PCTN) is a good example. The firm has a quality portfolio, and it’s been able to sell selected assets into the market at or around book value, justifying the portfolio’s overall NAV. Despite this, the stock is trading at a discount of around 25% to its 100p per share NAV value.

Analysts at Panmure Liberum believe this value could rise to 115p by 2028 thanks to rent increases across the portfolio and growth in asset values. The stock also yields 5% on a forward basis. Put all of those factors together, and the stock looks cheap.

The management agrees. Following its deployment of £17.3 million to buy back about 4.4% of its shares since January 2025, Picton recently announced a further buyback of up to £12.5 million – the best use of capital given where the shares are today.

By contrast, Regional Reit (LSE: RGL) faces a more uncertain outlook. The company is trading at a near-40% discount to NAV, with an 8% dividend yield, but its portfolio of mainly regional office buildings is only 78.6% occupied.

In the first half of the company’s financial year, it managed to push through rent increases of 4% on new lettings, which is positive, but it’s around half the rate of Picton’s, illustrating the supply/demand fundamentals of these two markets. Picton has also lost four tenants this year as they’ve upgraded their office space.

Regional is also having to invest millions upgrading the quality of its assets to meet government environmental standards and has a major debt maturity deadline in August 2026. So, while the shares might look cheap, it’s arguable that the business does deserve to trade at a discount considering its lower-quality portfolio and weaker balance sheet.

British Land (LSE: BLND) is another example of a Reit best avoided. Despite being one of the largest listed Reits in the UK, the group’s approach to asset management has left a lot to be desired.

Broker Panmure Liberum pulled no punches in its report on British Land’s full-year results published in May, noting group earnings per share hadn’t risen in a decade. It added: “Holding brand-new offices at yields of about 5% on the balance sheet isn’t doing much for beating your cost of capital over the medium term”.

The broker said the company would be better off selling older assets to fund new developments in the pipeline (as yet to be funded) rather than allowing debt to creep up as it has been doing. “We think the market will be in ‘wait and see’ mode,” the note signed off. Since this damning verdict, the shares have slumped, falling 17%.

One of the more interesting Reits in the sector, which tends to fly under the radar (mainly due to its size, which at £172 million puts it below the reach of most fund managers), is AEW Reit (LSE: AEWU). This trust is focused on finding undervalued assets. It likes to buy property with robust income streams, but with the potential for improvement either via development or renegotiating the lease.

The group is “sector agnostic”, so it can make trades in different areas of the market wherever it sees value. The market clearly appreciates this strategy as, despite the trust’s small size, it trades relatively close to net asset value, in contrast to the rest of the sector.

In June, AEW acquired Freemans Leisure Park, an 8.4-acre freehold site in the centre of Leicester, for £11.2 million, with a net initial yield of 10.6%. This in itself is a great deal and the team at AEW has plans to make the asset even more productive by utilising undeveloped land to build hotels and restaurants, introducing electric-vehicle charging and pushing through rent increases at upcoming rental reviews.

The company is hoping to replicate the success of a previous asset, Central Six Retail Park, Coventry, which it acquired for £16.4 million in November 2021, and sold part of in December last year for £26 million for an internal rate of return of 16%, excluding the remaining part of the retail park that AEW is holding onto.

The management is committed to a quarterly dividend of 2p per share (a yield of around 7.6% on the current share price), and the company’s balance sheet is relatively clean, with a debt-to-gross-asset-value ratio of 25% and a low fixed cost of debt of 2.959% until May 2027.

Profits in care homes

Target Healthcare (LSE: THRL) is worth considering for its unique exposure to a segment of the UK property market that’s generally overlooked.

The company owns and manages a portfolio of purpose-built care homes across the UK. At the end of June, it owned 93 assets worth around £1 billion. The issues in the UK social-care sector have been well publicised, and the scale of the problem was laid bare in a recent Knight Frank report, “Healthcare Development Opportunities”.

The report notes that, while the UK’s population of over-65s has grown by 20.7% over the past decade, the number of care-home beds has only risen by 2.9%. Virtually all of this supply has come from just one region, the West Midlands. Strip this region out of the data, and the number of care-home beds has declined.

Target has the size and scale to capitalise on this market dislocation. The management is actively and proactively managing the portfolio to achieve the best returns. It recently sold a property for £9.6 million at an 8% premium to book value and has renegotiated several leases where a tenant failed to pay the rent on time (less than 5% of the rent roll overall). Target managed to renegotiate these leases at a higher rate.

The majority of the leases agreed by the company are on inflation-linked, upward-only annual rent reviews, with a weighted average duration of nearly 26 years. This quality portfolio does not deserve the discount the market has currently assigned to the Reit. The shares are trading at a discount to NAV of around 20% and there’s also a dividend yield of 6% on offer.

PHP (LSE: PHP) has similar attractive qualities. While some investors have expressed concern about the company’s level of borrowing after the merger with peer Assura, the commercial logic of operating a large, diverse portfolio of healthcare assets remains compelling.

Most leases are inflation-linked and the income generated from the portfolio is effectively backstopped by the government. The enlarged group will also play a key role in the growth of the NHS estate and modernising the countrywide primary-care network.

Considering the quality of the income stream, PHP’s current discount to its 2026 projected net asset value of 109p per share looks unwarranted, especially considering the 7.6% dividend yield on offer.

A £1.3 billion pipeline of new developments

Now PRS is leaving the market, Grainger (LSE: GRI) is one of the best pure-play operators for investors to gain access to the build-to-rent residential property sector, with 11,000 rental homes. The group has just completed its transition from a standard corporation into a Reit, which means, under the Reit rules, the company must distribute 90% of its rental income every year.

In exchange, management expects the company will save as much as £15 million in corporate tax in the first year. Grainger says it will reinvest any unrestricted tax savings, and earnings are expected to jump by 25% in the current year, then 50% by fiscal 2029.

Part of this will come from the tax boost, but part will also come from property developments. The firm has a £1.3 billion pipeline of 4,500 homes and these are filling up as fast as the group can build them.

In March, the group launched The Kimmeridge, its flagship 150-home development and first built-to-rent scheme in Oxford. It filled all spaces in just seven months, five months ahead of schedule. Within a week Grainger also announced it had let 50% of the 132 build-to-rent homes in less than a month at its Seraphina Apartments development in Canning Town. The take up was “well ahead of expectations”, according to the company.

Across the rest of the existing portfolio, occupancy is sitting at 98%-99% and last year the group pushed through high single-digit percentage rent increases across the portfolio, thanks to the lack of supply and increased demand for rental properties across the UK. There are few if any other markets that have the ability to push through inflation-plus rent hikes in the same way.

Despite the quality of the company’s portfolio, it’s trading at a near-40% discount to its last reported NAV of 300p per share. The City has pencilled in a dividend per share of 9p a year by 2029 as the company’s growth and Reit transition pays off, implying a yield of around 5% by the end of the decade on the current share price.

For any new readers there are only 3 rules.

Rule One.

Buy Investment Trusts/ETF’s that pay a dividend and use those dividends to buy more Investment Trusts/ETF’s that pay a dividend.

Rule Two.

Rule 3.

Remember the Rules.

Gresham House Energy Storage to resume dividends at low level until 2027 as it prioritises growth

• 24 September 2025
• QuotedData

(Updated with our comment) Gresham House Energy Storage (GRID) will only pay a minimum dividend of 0.11p per share next month as it focuses on investment in growth and upgrades to its battery portfolio.

In half-year results today, the £412m investment trust said it would resume dividend payments that were suspended last year in response to a sharp decline in UK energy trading revenues.

However, the company emphasised that its financial priority was completing the three-year plan unveiled last November and doubling its capacity from 1.7GWh to 3.5GWh. As part of that, it wants capacity from new projects to grow 65% from 1.1GW to 1.8GW by extending the average duration of batteries from 1.6 to around two hours.

Once construction spending was completed, assuming current merchant revenues of £75k/MW/Yr its portfolio could generate excess cash flows of about 10p per share. That would enable the restoration of covered half-year dividends from 2027 although it did not say at what level.

In an update to its capital allocation policy, the company told shareholders it would pay a covered single dividend of at least 0.25p next year. 

This compares to the uncovered 5.5p and 7p total dividends GRID paid in 2023 and 2022. 

Chair John Leggate said: “The board believes that the growth opportunities we see represent the best future total return for investors and we are pleased to see good support for the approach among our shareholders. The growth that GRID aims to deliver over the next two years should significantly increase the revenue-generating base for the company, which will in turn drive greater long-term returns for shareholders.”

GRID shares have rebounded 43.5% in the past year but remain on a wide 33% discount to net asset value in response to the volatility and uncertainty over battery storage revenues. At 73p they trade less than half their 179p peak in September 2022 and 27% below the 100p at which they launched in 2018.

The results showed NAV fell 1.5% to 107.71p per share in the six months to 30 June as higher valuations on new projects becoming operational could not offset the impact of further cuts in power price forecasts. 

Nevertheless, underlying portfolio revenues jumped 76.9% to £31.7m from £17.9m a year ago, reflecting improved revenues and increased capacity. Net debt to NAV was 18% before the company’s recent refinancing with £160m of borrowing up £10m from a year ago with £48.2m of cash.

Our view

Matthew Read, senior analyst at QuotedData, said: “From an operational perspective, GRID continues to deliver with revenues and EBITDA almost doubling year-on-year, while achieving a notable milestone in surpassing 1GW of operational capacity. With augmentations underway, GRID’s battery fleet is steadily shifting towards longer-duration assets. The payback period on these investments tends to be short, reflecting the benefits of the additional revenue opportunities the longer-duration assets offer. However, the problem continues to lie in the valuation backdrop.

“There were a number of factors positively influencing the NAV progression, but the NAV still edged down at the margin, as third-party power price forecasts continue to be cut. This problem is not unique to GRID and has weighed on NAVs across the sector. However, these include assumptions about the amount of new generating capacity – including renewables – that will come online. We are increasingly wondering whether the projected power price falls may be overdone as, presumably, some of the expected new capacity will not be built if the price is too low.

“We think that the decision to prioritise reinvestment over distributions is probably the right one but shareholders who are waiting for meaningful dividends may not share this view as they will have to hold on until 2027 to see this happen. However, if GRID’s management can deliver on its three-year plan – doubling installed capacity to 3.5GWh and securing long-term contracted revenues – the fund should be in a much stronger position to provide sustainable income backed by a bigger, more valuable portfolio.

“Clearly execution risk remains – particularly around NESO’s queue reforms and the regulatory process – but if Ofgem’s rule changes (such as GC0166) and NESO’s reforms come through as hoped, shareholders could be well-rewarded for their patience.”

Written By QD News

2 FTSE 250 dividend shares with double the current index yield

Jon Smith presents the case for two FTSE 250 stocks with yields above 6.8% that could provide an investor with high levels of income going forward.

Posted by Jon Smith

Published 25 September

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

The average dividend yield of the FTSE 250 is 3.38%. Of course, within the index, there are many different stocks, some with higher or lower respective yields. For investors who like to be active in their picks, doubling the index yield can be possible, even without having to take on a really high level of risk.

Building the future

One option to consider is International Public Partnership (LSE:INPP). The company invests in a large diversified portfolio of infrastructure assets and businesses. These are often under public-private partnership structures or similar long-term contracts like building schools.

Should you buy International Public Partnerships Limited shares today?

Over the past year, the share price is down a modest 5%, with the dividend yield at 6.94%. One reason why I believe the dividend is sustainable is due to the nature of the contracts. They often span several years, with deals linked to inflation, which protects the cash flows and makes it predictable. As a result, the company can look to budget around revenues with some visibility. Although this doesn’t mean it’ll never post a loss, it does provide confidence that management can generate cash in future years sufficient to cover dividend commitments.

It also has a clear dividend policy, so investors know what they are getting themselves into. For example, International Public Partnership says that it expects full dividend cash coverage from net operating cash flow before capital activity. This is quite important as it means the company expects that its operating cash generation (before considering things like buying or selling assets) is sufficient to cover the dividend.

One risk is the concentration of projects with the government. Even with long-term contracts, if the administration decides to cut back spending on certain areas, it will eventually have a negative impact on the company’s revenue overall.

Buying a potential dip

Another idea is Greencoat UK Wind (LSE:UKW). It’s a UK-listed renewable infrastructure investment trust focused exclusively on UK wind farms. Over the past year, the stock is down 22%, with a current dividend yield of 9.66%.

Let’s first address the share price fall over this time period. Part of this reflects a drop in the net asset value (NAV). The stock does follow the movements in the value of the portfolio, which is its wind farms. Therefore, lower valuations have dragged the share price down with it.

Another factor has been that wholesale electricity prices have come down compared to the highs. That directly affects revenue from electricity sales, especially for parts of the portfolio not in fixed contracts. I’m not too concerned here for the long term, as commodity prices are volatile and therefore could bounce back just as quickly as they fell.

Despite these problems, the dividend per share has been increasing over the past few years. It aims to align the dividend increase with inflation, which is a positive. In the latest H1 2025 results, the dividend cover was 1.4. Anything above one shows that the current earnings per share can completely cover the dividend. Therefore, I don’t see any immediate worry with any potential cuts.

Even though the above stocks are higher risk than normal, the large dividend yield could make them attractive enough for an investor to consider.

Persistent REIT Mispricing Presents Opportunity: Gaining An Edge Assessing This Sector

Sep. 22, 2025 9:30 AM ETVanguard Real Estate Index Fund ETF Shares VNQ, SCHH

Dane Bowler

Summary

• REITs are prone to significant mispricing due to their complexity and small market caps, creating opportunities for skilled stock pickers.
• The sector’s complexity stems from diverse property types, varying locations, and inconsistent non-GAAP financial metrics like FFO and AFFO.
• Currently, REITs trade at notable discounts to NAV and earnings multiples, making them attractive compared to the broader market.
• While broad REIT ETFs like VNQ offer value, targeted stock selection within REITs can yield superior returns by exploiting market inefficiencies.
• Looking for a portfolio of ideas like this one?

The market is not fully efficient, with mispricing prevalent across equities. REITs have a particularly high degree of mispricing, with individual REITs both over- and undervalued.

More mispricing means more opportunity for enhanced returns through careful stock selection, but also a higher difficulty.

Let me begin by discussing the factors that have led to persistent mispricing in REITs and then move on to discuss the analytical concepts that can give one an edge in REIT investment.

Why REITs have more mispricing than the broader market

REITs have a high ratio of complexity to size.

Complexity refers to the quantum of knowledge/expertise/resources required to analyze something, while size refers to market cap.

Market cap dictates the quantity of resources that can be allocated to analysis. Massive financial institutions have the resources to fully and properly analyze anything. However, it’s not worth it for them to dedicate resources to small market cap areas because they would not be able to invest a significant portion of their capital there anyway.

These institutions often have many billions to invest, so any position under maybe $50-$100 million would potentially be an irrelevantly small percentage.

An institution cannot invest $100 million in a $1B market cap stock without dramatically altering market pricing. Therefore, they largely stay away from small caps.

REITs as a whole are not very big. On 5/9/25 we calculated the combined market cap of all equity REITs at both the common and preferred levels, and it summed to a grand total of $1.38 trillion.

Source: REIT Sector Gallery

A substantial portion of that $1.38 trillion consists of a few very large companies. The top 10 are just about half of the entire market cap of REITs.

There’s arguably enough institutional attention among these large caps to have somewhat efficient pricing. Institutions can be wrong, and one can potentially still outperform in these names with a unique understanding or a differentiated thesis, but generally the pricing of these particular REITs makes sense.

It’s in the rest of the REIT market where mispricing is rampant. Less than $700B of market cap is split between over 250 common and preferred issues. That’s a tiny average issue size, which, as discussed above, limits the resources that can be spent studying each one.

That small size is made all the more challenging by the immense complexity of REITs.

Complexity factors

Specifically, REITs are challenging to analyze for the following reasons:

• Dozens of property types with distinctly different fundamentals.
• Properties located across 50 MSAs with individual supply and demand aspects
• Non-GAAP financial metrics like FFO and AFFO
• Definitions of non-GAAP financial metrics differ from company to company with minimal standardization

Property types and locations

In our analysis we note 20 distinct property types but it could be broken down much further. Healthcare, for example, actually has hospitals, medical office, assisted living, memory care, independent living, skilled nursing, and a few other smaller categories, but it’s often lumped together as the “healthcare” REIT subsector.

To glean the prospects of a given REIT, one must know not just the property types, but also the location specifics. For example, Houston has a massive amount of new apartments being constructed, while some of the midwestern markets remain undersupplied.

Since REITs often own assets in many different MSAs, there’s a significant knowledge barrier to estimating fundamental trajectory.

Non-GAAP metrics with differing definitions

The accounting rules on property depreciation make earnings and earnings per share almost useless metrics for REITs. GAAP accounting records a roughly 3% annual charge against property purchase price for depreciation, while in reality, the properties may be appreciating or depreciating at a very different pace.

As such, the REIT industry primarily uses non-GAAP metrics for earnings. NAREIT, the third-party governance organization, has defined FFO which is an adaptation to GAAP earnings that takes away gain on sale but adds back property depreciation. For decades, FFO was the dominant metric for valuing REITs.

In recent years, however, Adjusted Funds From Operations, AFFO, has taken over as the preferred metric. In many ways, AFFO is better because it accounts for costs such as recurring maintenance and things like amortization of tenant improvement costs. However, AFFO is not a defined metric, and each company will have their own calculation for AFFO.

Some companies like to sneak in various adjustments to AFFO that make their AFFO higher than what would properly be considered “true earnings.” Specifically, we have come across the following non-standard addbacks:

• Stock-based compensation
• Non-real estate depreciation
• Maintenance capex categorized as growth capex
• Strategic straight-lining (or not straight lining) of non-linear cash flow streams

These adjustments can be as much as 20% of AFFO, and if an analyst is not accounting for them on an individual company basis, it can throw off relative valuation. Many REITs screen as good values but are less appealing when accounting definitions are aligned.

Property level metrics are also industry specific and have differing definitions:

• Net Operating Income (NOI)
• Same-store pool
• Cap Rate (GAAP versus cash) (economic vs headline)

Each REIT has a different definition of what qualifies a property for being included in the same-store pool. Some REITs will start to include properties before they are fully stabilized (due to a loose definition of stabilized). This can artificially raise reported same-store NOI growth as stabilization is essentially being mischaracterized as organic growth.

Looking at the headline numbers, one REIT may report 7% same-store NOI growth while another reports 5%, but the 5% REIT may actually be growing faster. The only way to find out is to dig into each company’s same-store pool definition and also account for capex applied in the relevant period.

Cap rates are also a bit tricky to understand. Not only is the metric inverse, where a higher cap rate means the property is cheaper, but the actual calculation of a cap rate can be done in many different ways. Some REITs report headline or NOI-based cap rates while others use economic cap rates that factor in expected capex. There can also be as much as 200 basis points of difference between GAAP (straight line) and cash cap rates (cash on year 1).

Rampant mispricing in REITs

None of the above complexity factors are insurmountable. Teams of analysts with enough resources can dig through all these factors to obtain really clean cash flows and form legitimate projections from that.

The challenge is that there are very few institutions committing such resources to REITs because market caps are so small.

So, REITs are primarily left with an investor base that’s not equipped with enough time/expertise/resources to properly value them. As a result, market prices are often off by a considerable magnitude. In our experience watching REITs trade every day, market prices often move in groups with minimal differentiation for individual company fundamentals.

In the short term, a REIT’s price movement seems to fluctuate more based on the broad category in which it falls rather than the granular aspects of its individual business. This sort of environment lends itself to greater disparities between market price and fundamental value.

Some REITs are dramatically overvalued, while others can be bought at 60% of net asset value. It’s fruitful territory for stock pickers with the skills to navigate the difficult sector.

General cheapness of sector

Given the lack of granular focus discussed above, REITs have largely traded based on broad macro factors that tangentially affect them. The market broadly believes REITs are adversely affected by interest rates, so the sector has languished since Fed hikes started in 2022. This has left REITs quite cheap relative to the broader market.

Specifically, the median REIT is trading at

• 84.9% of NAV
• 13.5X forward FFO
• 15.3X forward AFFO

Discounted valuation at a time when the overall stock market is priced expensively makes REITs generally opportunistic. As such, I believe one could buy a broad REIT ETF like the Vanguard REIT ETF (NYSEARCA:VNQ) and outperform the market.

However, such an ETF would not take advantage of the rampant mispricing within REITs. ETFs own based on market cap, which makes them dominated by the more efficiently priced REITs. Even among the mid-cap holdings of ETFs, they would hold both the overvalued and the undervalued.

I see far greater opportunity in being a stock picker within REITs.

With enough experience and understanding of the nuances of REIT valuation/accounting, it’s quite discernible which REITs are trading below fundamental value. The future is uncertain, so not every discounted REIT will be a winner, but a portfolio consisting of specifically the underpriced portion of the mispriced REIT universe is well positioned to come out ahead.

Analysis-Global investors, blindsided by stunning US comeback, jump back in

Thu, September 25, 2025

By Naomi Rovnick

LONDON (Reuters) -An investor out of the United States and into Europe and Asia has reversed course as big money managers ride a wave of AI and interest rate-cut euphoria into the year-end, ditching the “rest-of-the world” trade for now.

Global fund managers had offloaded U.S. stocks at a record pace after President Donald Trump unveiled steep reciprocal tariffs on April 2. The market has recovered since then, however, and U.S. stocks have surged 7% in the last quarter.

Wall Street’s market supremacy is back and investors are likely to favor U.S. assets in the coming quarter as traders price in 110 basis points of Federal Reserve rate cuts by end-2026 and AI juggernauts boost analysts’ stock market targets and U.S. economic growth.

“There’s no need for pessimism right now about the U.S.,” said Salman Ahmed, Fidelity International’s global head of macroeconomics and strategic asset allocation. He was positive on U.S. small-cap stocks that typically benefit from rate cuts and had turned neutral on Europe and Japan.

The Fed last week cut rates for the first time since December.

BIG INVESTORS, IN U-TURN, BET ON US EQUITIES -BofA

In June, global fund managers surveyed by Bank of America were the most negative on U.S. stocks and the dollar out of all major asset classes. But by early September, these big investors were betting again on U.S. equities, buying back into the dollar and reducing exposure to euro zone, emerging market and UK stocks, BofA’s survey showed.

Francesco Sandrini, Italy CIO at Europe’s biggest investor Amundi, said he was currently tilting his portfolios towards the U.S. and expected smaller domestically focused companies to benefit in particular from rate cuts. He had turned less positive on European banks and Chinese stocks.

Data from fund tracking service Lipper, whose figures provide a snapshot of the global mood, showed investors resumed buying U.S. stocks in August after pulling almost $78 billion from the asset class in the three months prior.

Flows into euro zone funds that report to Lipper, which hit a 12-month high of almost $3 billion in April, dwindled to $563 million by August.

Investors said these moves showed how diversifying away from the U.S. was a better idea in theory than in practice.

“You cannot get away from the U.S.,” Russell Investments global head of fixed income and foreign exchange solutions strategy Van Luu said. “Especially with equities.”

Measured in dollars, the de facto reporting currency for many global investors, the benchmark S&P 500 index has outpaced its European equivalent since June. U.S. small caps have edged ahead of Europe’s since late August.

Weekly flows into U.S. equity funds tracked by EPFR hit a year-to-date high of almost $58 billion last week as euro zone funds drew in just $1 billion and Japan funds registered zero net inflows, Barclays’ analysis of the data showed.

TREASURIES BACK IN VOGUE

The U.S. asset comeback can also be seen in bonds.

French budget strife and Germany’s borrowing bonanza have lifted euro zone bond yields by about 15 bps this quarter as equivalent U.S. yields have fallen by roughly the same amount. Bond yields move inversely to prices.

Of the major U.S. assets hit by April’s tariff turmoil, only the dollar is lagging, but it has stabilised.

After the greenback posted its worst first-half of the year against the euro in the six months to June, an index measuring the greenback against rivals including the euro is up 0.8% this quarter.

Some investors said they were returning to Wall Street with one eye on the exit given medium-term risks such as Trump’s trade levies exacerbating U.S. inflation and weighing on growth.

“The (market) momentum is certainly there, but let’s take it quarter by quarter,” Fidelity’s Ahmed said.

He saw “shades of 2000” in the AI stock boom, warning that a repeat of that year’s dotcom stock crash could create an economic shock by reducing consumer wealth.

U.S. households’ equity ownership has hit a 75-year high and stocks owned directly or through retirement vehicles represent 68% of their total wealth, analysis of Fed data by consultancy Capital Economics showed.

“That should ring alarm bells, even if the buoyant stock market keeps rising for a while,” Capital Economics said.

Foresight Group managing director Mayank Markanday expected U.S. savers who have parked a record $7.7 trillion in U.S. money market funds to move into domestic stocks or high-yielding U.S. corporate debt as rates fall.

“The only positive for the rest of the world is that valuations remain more attractive in relation to the U.S.,” he said.

“However its definitely not the time to cut your U.S. exposure and swing heavily towards that rest-of-the-world trade.”

(Reporting by Naomi Rovnick; editing by Dhara Ranasinghe and Bernadette Baum)