The REIT Total Return Portfolio is positioned for those seeking to maximize total returns with a medium-to-long investment horizon.  Investment in the REIT Total Return Investment Portfolio grants participation in our investments.  As we invest our portfolio, your account will be invested simultaneously in the same securities at the same prices.  This affords full use of our expertise in securities analysis and trading, granting full participation in a portfolio aimed to maximize total returns.  

Fees and Minimums

Management fee:  1% Annually
Minimum Investment:  $50,000

REIT Total Return Investment Portfolio as of 06/30/2024

All performance information is of the portfolio manager’s account, net of the asset management fee**

Portfolio/index 1-year total return 6/30/2023-6/30/2024 5-year total return 6/30/2019-6/30/2024 Total return since inception 7/1/16-6/30/2024
REIT Total Return Portfolio  4.64% 39.12% 62.41%
MSCI U.S. REIT Index (RMS)  7.60% 21.02% 36.67%                                               
Outperformance -2.96% 18.1% 25.74%

Data for REIT Total Return Portfolio from Interactive Brokers and RMS from S&P Global Market Intelligence. 
Please see Important Notes and Disclosure below.


As fundamentals and macros are shifting significantly, we want to focus this review primarily on the environment for REITs broadly and for specific REIT sectors.  Price movements of individual REITs have not properly matched fundamental changes making some areas opportunistic and others wise to avoid.  Rather than prices moving on individual company fundamentals or sector fundamentals, they have largely continued to just track interest rates.  read the full report here

About the Portfolio
The Total Return REIT investment portfolio is actively managed with an aim to generate high total returns from a mix of dividends and capital appreciation.  It consists of 10-20 hand-selected stocks from a pool of 181 tax-advantaged equity REITs and adjacent securities.  We use fundamental analysis and experience to continuously pivot into the most opportunistic positions.
A hybrid approach of value and growth informs our decisions as we comb through the REIT universe to find stocks that offer unusually high growth relative to their earnings multiples.  Using a combination of public and proprietary data sources along with over 30 years of collective experience as REIT dedicated analysts, we are prepared to understand business models, fundamental outlook and valuation and management of each REIT we look at.
The portfolio is constructed with an eye on balancing high returns with diversification.  Each stock is vetted both from a top-down and bottom-up approach.  We look for REITs that are in property sectors with tailwinds and select the individual REIT within these advantaged sectors that has the best mix of quality and value.
Allocation Discipline
Weights of individual positions generally range from 3% to 10% with the higher weights given to the most opportunistic stocks.  Beyond individual stock weights, we maintain diversification between property sectors, generally keeping the portfolio less than 20% exposed to any given property type.  There are 21 distinct property sectors within REITs and we overweight the sectors that have better fundamental outlooks.  The portfolio is rebalanced continuously as opportunity presents.
Sell Discipline
Selling is a constant measure of intrinsic value against market price as compared to the next best opportunity.  If the market price of a current holding gets sufficiently close to intrinsic value that a different stock becomes more opportunistic than the current holding, it will be replaced.
Every investor has a different capacity for risk.  We have certain requirements to ensure that our proprietary investment portfolio is suitable for your financial situation and risk tolerance.  Implementation is dependent upon the appropriateness of the portfolio in light of your current financial situation and risk tolerance levels.
Please complete the form below to start the application process.  If you have any difficulty viewing or submitting the form below, you can also access it here.

If you have any questions or would like more information about our REIT Total Return Investment Portfolio please complete the form below.

Important Notes and Disclosure

Material Market and Economic Conditions.   March 2022-2023: Significant increases in the Federal Funds Rate by the Federal Reserve have caused REIT market prices to decline more than the broader markets. REITs rely on debt financing to acquire properties and fund their operations; expiring lower-cost debt is being refinanced at higher interest rates due to prevailing market conditionsMarch 2020: REIT Total Return’s value declined substantially as COVID shut down the economy.  It recovered in 2021 as the economy reopened.  January 2019: Tax-loss selling’s calendar expired and the government reopened on January 25, 2019. The combined effect caused our shares to rise more than the broader markets.  December 2018: Another Fed-Funds rate hike, unresolved US-Chinese trade, a partial government shutdown, and an exaggerated tax-loss selling season put extreme downward pressure on equity prices.  All of these factors contributed to diminished liquidity and more significant share price declines in small-cap/value issues; REIT Total Return is focused on small-cap/value issues, so our decline was significantly more precipitous.

Material Conditions, Objectives, and Investment Strategies.  REIT Total Return is an actively managed investment portfolio of real estate equities, primarily common and preferred shares of REITs, with an aim to generate high total returns from a mix of dividends and capital appreciation.

All REIT Total Return Portfolio performance information on this page is based on the performance of the Portfolio Manager’s account, using the manager’s own funds. Performance of the Portfolio Manager's account is calculated by Interactive Broker on a daily time-weighted basis, including cash, dividends and earnings distributions, and reflects the deduction of broker commissions (when commissions were charged). Actual client returns will differ. **2nd Market Capital’s advisory fees are simulated and applied retroactively to present the portfolio return “net-of-fees”.

None of the performance information displayed on this page is based on the actual performance of any 2MCAC client account investing in this portfolio. The performance in a 2MCAC client account investing in this portfolio may differ (i.e., be lower or higher) from the performance of the account managing this portfolio and portrayed on this page based on a variety of factors, such as trading restrictions imposed by the client (resulting in different account holdings), time of initial investment, amount of investment, frequency and size of cash flows in and out of the client account, applicable brokerage commissions (when commissions were charged), and different corporate actions. Clients investing in this portfolio may view the actual performance of their investment in this portfolio by logging into their Interactive Brokers account and reviewing their customized dashboard.

Clients may restrict any of the securities traded in their account but should note that any restrictions they place on their investments could affect the performance of their account leading it to perform differently, worse or better, than (a) the above-portrayed account or (b) other client accounts invested in the same portfolio.

Forward-looking statements. Commentary may contain forward-looking statements which are by definition uncertain. Actual results may differ materially from our forecasts or estimations, and 2MCAC cannot be held liable for the use of and reliance upon the opinions, estimates, forecasts, and findings in these documents.

Past performance does not guarantee future results.  Investing in publicly held securities is speculative and involves risk, including the possible loss of principal.  Historical returns should not be used as the primary basis for investment decisions.  Although the statements of fact and data in this commentary have been obtained from sources believed to be reliable, 2MCAC does not guarantee their accuracy and assumes no liability or responsibility for any omissions/errors.

Use of Leverage or Margin. REIT Total Return Portfolio will utilize margin only for trading purposes (the ability to use the proceeds from stock sales immediately for new purchases instead of waiting for the usual 2-day settlement period), but not for borrowing purposes.

Benchmark Comparison. Our REIT Total Return Portfolio is compared to the Dow Jones Equity REIT Index and the MSCI U.S. REIT index because they are common REIT Indices.   The Dow Jones Equity All REIT Index is designed to measure all publicly traded equity real estate investment trusts (REITs) in the Dow Jones U.S. stock universe. The MSCI US REIT Index is comprised of equity real estate investment trusts (REITs) eligible included within the eight Equity REIT Sub-Industries of the Equity Real Estate Investment Trust (REITs) Industry. It is not possible to invest directly in the Dow Jones Equity All REIT Index or MSCI US REIT index.  Index returns do not represent the results of actual trading of investible assets/securities. Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the securities underlying the index. The imposition of these fees and charges would cause the actual performance of the securities to be lower than the Index performance shown. The results portrayed include dividend income. Our REIT Total Return Portfolio may include REITs that are not eligible for inclusion in the Dow Jones Equity All REIT Index or MSCI US REIT Index.

There can be no assurance that a benchmark will remain appropriate over time and 2MCAC will periodically review the benchmark’s appropriateness and decide to use other benchmarks if appropriate.

Expenses.   Returns reflect the deduction of any transaction expenses. REIT Total Return's advisory fees are simulated and applied retroactively to present the portfolio return “net-of-fees”.

Calculation Methodology.   Returns are calculated by 2MC with data from Interactive Brokers LLC using the Modified Dietz method, a time-weighted measure of performance in which cash flows are weighted based on their timing.    Dividends in REIT Total Return are reinvested.

S&P Global Market Intelligence LLC. Contains copyrighted material distributed under license from S&P.

Contact Us

2nd Market Capital Advisory Corp
650 N. High Point Road
Madison, WI 53717
(608) 833-7793 - phone

Investment advisory services offered through 2nd Market Capital Advisory Corporation, a Wisconsin registered investment advisor.

View disclosure information for 2nd Market Capital Advisory Corporation and our investment professionals by visiting the SEC Investment Advisor Public Disclosure website.

Copyright 2021 2MCAC | Website built and maintained by Jack Knesek