Question

What's the difference between an equity REIT and a mortgage REIT? Are they both equally good as an inflation hedge?

Answer 1

There are various differences between equity RIETs and mortgage RIETs-

1. Equity RIETs focuses on on owning and operating properties while mortgage REITs invest into mortgages and related business associated with mortgage.

2. Equity RIETs are for investors who are looking for or making return through capital appreciation by following buy and hold strategy while mortgage RIETs focuses on generating income without any focus over capital appreciation.

3.Equity REITs are less risky while Mortgage REITs are high risk taking beds which generally have exposure to credit risk.

4.Equity REITs tends to be cyclical in nature while mortgage REITs are not cyclical in nature.

No they are not equally good as inflation hedge because equity RIETs deals with capital appreciation so it is a better hedge for inflation while mortgage RIETs are not an inflation play,it is more of an income play.