	Introduction(1)

Real Estate Investment Trusts (REITs) are mutual funds made up of real estate and mortgageassets. In recent years, their performance has been stronger than broader market indicators, leadingto calls for inclusion of a REIT alternative in the Thrift Savings Plan (TSP) for federal workers. H.R. 1578 , the Real Estate Investment Thrift Savings Act, was introduced April12, 2005, to provide for an REIT option in the TSP. Hearings were held on the legislation April 19,2005, by the House Government Reform Subcommittee on the Federal Workforce and AgencyOrganization. Further hearings are scheduled for April 26, 2006. A companion bill, S. 2490 , was introduced in the Senate on April 13, 2006. This report summarizes the legal and economic history of REITs and the factors that havecontributed to recent strong performances of REITs as investment vehicles. It then addresses thearguments behind their possible inclusion as an investment alternative in the TSP. At present, the TSP hasfive investment vehicles, three of which are broad stock indexes.
Real Estate Investment Trusts (REITs) are mutual funds made up of real estate and mortgageassets. In recent years, their performance has been stronger than broader market indicators, leadingto calls for inclusion of an REIT alternative in the Thrift Savings Plan (TSP) for federal workers. At present, the TSP is limited to five savings vehicles, three of which are broad-based stock indexes.Proponents of inclusion cite greater diversification and participant choice in the TSP as well aspotentially higher returns as benefits of the proposal. The TSP board, while studying the matter, hasargued that changes should only occur as part of a comprehensive program, should not encourage"return chasing" by participants, and should maintain the current very low cost structure of the TSP.
H.R. 1578 , the Real Estate Investment Thrift Savings Act, was introduced April12, 2005, to provide for an REIT option in the TSP. Hearings were held on the legislation April 19,2005, by the House Government Reform Subcommittee on the Federal Workforce and AgencyOrganization. Further hearings are scheduled for April 26, 2006. A companion bill, S. 2490 , was introduced in the Senate on April 13, 2006.
This report summarizes the legal and economic history of REITs and the factors that havecontributed to recent strong performances of REITs as investment vehicles. It then addresses thearguments behind their possible inclusion as an investment alternative in the TSP.
This report will be updated as events warrant.