Real estate investment trusts (REITs) typically perform worse when interest rates are rising. In fact, there's a rule of thumb many investors have used for this asset class: rates up, REITs down. REITs typically own and manage properties, and they often rely heavily on borrowing to expand their portfolios, so higher interest rates can hit them harder than many other businesses. In addition, real estate values tend to rise when interest rates fall. And REITs are dividend stocks -- they're legally bound to distribute 90% of their taxable income to shareholders as dividends -- so when interest income is harder to find in a low-interest rate environment, these stocks are more attractive to income investors. Image source: Getty Images.
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