What investments should you buy for the second half of 2016? A panel of Wall Street pros offer their read on the stock market and 10 best ideas for exchange-traded funds and one closed-end fund — for a total of 11 funds — for you to consider.

7, 8. Vanguard REIT ETF (VNQ) and iShares International Developed Real Estate ETF (IFGL)

By Kevin Mahn

REITs represent a type of security that invests in real estate, through either property or mortgages, and typically trade on an exchange. While many concerns have been raised about non-traded REITs in recent years, publicly traded REITs, both in the U.S. and globally, have turned in some impressive results of late. Consider the performance of two of the better-known indexes that track U.S. and global REITs over the past year and thus far in 2016.

As a point of reference, the S&P 500 (SPY) index, a widely recognized benchmark of U.S. stock market performance, has returned 3.57% and 1.72% respectively over these timeframes. Yet despite this apparent momentum, and some recent optimistic forecasts from a couple of well-known investors such as Jeffrey Gundlach, CEO of DoubleLine Capital and Bill Gross, portfolio manager at Janus (specifically related to mortgage REITs in their cases), REITs have basically continued to fly under the radar of the attention of the media and many investors for some reason.

Perhaps this aversion is due to either the lingering effects of the non-traded REIT fallout on advisors or concerns that REITs may not perform well in a rising interest rate environment. Many assume that REITs are synonymous with the housing market and while there may be some correlation with mortgage REITs and housing, there are many other different sectors of REITs available for consideration that are not necessarily as correlated to residential housing. According to the Global Industry Classification Standard (GICS), as published by MSCI, there are currently nine sub-industries of REITs as follows:

1. Diversified REITs: companies or trusts with significantly diversified operations across two or more property types.
2. Industrial REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of industrial properties. Includes companies operating industrial warehouses and distribution properties.
3. Mortgage REITs: companies or trusts that service, originate, purchase and/or securitize residential and/or commercial mortgage loans. Includes trusts that invest in mortgage-backed securities and other mortgage related assets.
4. Hotel & Resort REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of hotel and resort properties.
5. Office REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of office properties.
6. Health Care REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of properties serving the health care industry, including hospitals, nursing homes, and assisted living properties.
7. Residential REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of residential properties including multifamily homes, apartments, manufactured homes and student housing properties.
8. Retail REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of shopping malls, outlet malls, and neighborhood/community shopping centers.
9. Specialized REITs: companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of properties not classified elsewhere. Includes trusts that operate andinvest in storage properties. It also includes REITs that do not generate a majority of their revenues and income from real estate rental and leasing operations.

Additionally, after the market closes on August 31, 2016, S&P Dow Jones Indices and MSCI are scheduled to reclassify exchange-listed real estate companies, including listed equity REITs, from the financials sector to a new real estate specific GICS sector. The REITs industry is being renamed to Equity Real Estate Investment Trusts (REITs), and excludes Mortgage REITs. mortgage REITs will remain in the financials sector under a newly created industry and sub-industry called mortgage REITs. These changes will certainly help portfolio managers navigate the complex REIT marketplace more efficiently and perhaps draw more attention to REIT investments in general.

It is also interesting to note that from a historical perspective, REITs have demonstrated that they have actually performed well in environments when the Fed has gradually raised interest rates (i.e. the same scenario that we, at Hennion &Walsh, believe will take place this time around). For example, during the timeframe of 2004-2006, the Fed raised the Federal Funds target rate on 17 different occasions in 25 basis point (0.25%) increments, and U.S. publicly traded REITs, as measured by the Wilshire REIT Index, experienced an average annual total return of 27.7%.

Click here to read the entire article on Forbes.com.