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Are REIT Funds' Best Days Behind Them?

There are several reasons to worry.

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As the REIT index has been climbing, investors have flooded REIT mutual funds with cash.

Of the nearly $1.6 billion that has flowed into real estate funds for the past year through April 2010, more than half has come in the past month and nearly all has come in 2010 (see chart below). In other words, investors have been putting money into real estate funds with dramatically greater velocity as prices have risen and yields have dropped.

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John Coumarianos does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.