Jim Cramer's REIT Picks From April Reveal Alarming Truth

Jim Cramer is a lightning rod when it comes to scrutiny. On one hand, giving investing advice every day on air for years is naturally going to produce some losing picks. However, Cramer has become the focal point of a lot of targeted opposition. For instance, you can check out his ongoing (albeit one-sided) feud with George Noble, who is quick to call out Cramer. Or, you could check out the Journal of Retirement’s in-depth study of Cramer’s Charitable Trust performance and see that “Cramer’s portfolio has underperformed the S&P 500 total return index both on an overall returns basis and in Sharpe ratio.”

On April 5, 2022, CNBC.com published an article outlining four real estate investment trusts (REITs) (all of which focused on apartments) that could be solid investments. The article title uses phrases like cash-in and skyrocketing rent prices. Between the star and the optimism, it certainly draws you in. So, let’s review the picks.

Independence Realty Trust Inc. (NYSE: IRT) closed at $26.26 the day the article was published. As of July 20, this REIT is trading at $21.27, down nearly $5 per share.

American Campus Communities Inc. (NYSE: ACC) closed at $59.59 on April 5 and is currently at $65.17, up nearly $6 per share.

AvalonBay Communities Inc. (NYSE: AVB) closed on April 5 at $249.44 and is currently trading at $195.68 per share, which is down almost $55 per share.

Camden Property Trust (NYSE: CPT) closed at $169.91 per share the same day CNBC published the article on Cramer’s picks. It is currently trading at $134.51, down about $35 per share.

Diversification is important, and it’s never a good idea to put all your eggs in one basket. However, the only way you would have made money off Cramer’s picks would have been to pick exactly which one of the four would grow at all. These results seem to be in line with the adage some use that says that you win if you go against Cramer.

However, it may be worth considering the performance of the S&P United States REIT Index. The S&P United States REIT Index defines and measures the investable universe of publicly traded real estate investment trusts domiciled in the United States. At the time of CNBC’s article, the index was at $407.32 and currently stands at $342.68. So, the index as a whole has dropped about $65 per share.

With that kind of drop to an entire market, finding success is rare. So, while it is easy to bash Cramer, he did manage to find a one winner in an industry that’s drowning. The bigger takeaway is that while REITs are historically a solid investment, there may be an alternative, considering all the variables the real estate market is facing today.

The truth is that a better option for many investors is to put their money in non-traded assets like fractional real estate and real estate crowdfunding. Ownership, fractional or otherwise, may provide a more stable, gradual and safer way to see big returns.

For instance, while the S&P United States REIT index has produced negative returns of -19.49% year to date (YTD), this non-traded real estate fund is up 6.3%.

Looking for ways to boost your returns? Check out Benzinga's coverage on Alternative Real Estate Investments:

Investors Are Getting Into Real Estate By Purchasing Shares Of Rental Properties For As Little As $100

This REIT You've Probably Never Heard of Has Paid a Dividend Above 8% For The Last 5 Years

This Non-Listed Real Estate Fund Continues To Outperform Publicly Traded REITs

Or browse current investment options based on your criteria with Benzinga’s Offering Screener.

Photo by s_bukley on Shutterstock

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