**Telecom REITs Surpass Residential as Top Allocation Among Active Fund Managers**
Telecom real estate investment trusts (REITs) have overtaken residential REITs as the top allocation among actively managed real estate investment funds for the first time since 2017, according to Nareit’s quarterly Active Managers Tracker for Q2 2025.
The report reveals that fund managers allocated 17% of their portfolios to telecom REITs, compared to 16% for residential REITs. This shift marks a significant milestone in sector popularity among fund managers.
Telecommunications emerged as the most overweight sector relative to its index weight, with investments reaching 136% of its index share. It also posted the largest annual gain during the second quarter. Data centers, bouncing back after recent challenges, recorded the highest quarterly increase and now represent the second most overweight sector at 129% of their index share.
Other notable movements include increased attention to office and timberlands. Office sector allocations have reached parity with their index share for the first time since the COVID-19 pandemic. Timberlands, meanwhile, rank as the third most overweight sector, with investments at 119% of their index weight.
These findings are based on Nareit’s analysis of the investment holdings of 23 of the largest actively managed real estate funds that specifically invest in REITs.
