Investors have once again been piling into real-estate stock mutual funds, drawn in by their meaty dividend payouts.
But the yields on U.S. real-estate stock funds—2.6% on average for the Morningstar Inc. category—come with a risk that has burned investors before: vulnerability to rising interest rates.
Investors poured a record $12.4 billion into U.S. real-estate mutual funds and exchange-traded funds last year, topping the previous peak of $10.9 billion seen in 2012. Meanwhile, the average real-estate fund is up 31% over the past 12 months.
Read full story: Can Popular REITs Avoid a Rate Hit?
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