Real estate stock indexes

Abstract

The principles underlying real estate stock indexes were compared using 3 indexes: the National Association of Real Estate Investment Trusts (NAREIT) Index, the Wilshire Real Estate Securities Index, and the Lehman Brothers REIT Index. Although the 3 indexes cover the same market sector and overlap considerably, differences in construction methodology, entry, and exit criteria, and composition imply that the indexes are not exact substitutes for one another. Current and prospective investors need to understand what each index includes and how the indexes differ to determine appropriate choices for sector tracking, performance measurement, and use in asset allocation.