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Forget stocks, this year's hottest trade has been.... real estate

Talking Numbers

It's been blowing away stocks so far this year as interest rates dropped. Does that mean now is the time to put your money in… real estate?

Specifically, real estate investment trust (REITs).

The benchmark MSCI REIT index is down 3 percent in the past week as bonds have sold off. But, the index is up 14 percent year-to-date and well outpacing the S&P 500's gains of 5 percent so far in 2014. That's a far cry from last year, when the REIT index was up only 2.5 percent in as stocks soared more than 28 percent.

(See: CNBC's Realty Check)

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However, Ari Wald, head of technical analysis at Oppenheimer & Co., is lukewarm on the MSCI REIT index, which has 131 components worth a combined $590 billion.

"There are some REIT stocks that we like a lot [and] there are some REIT stocks we don't like a lot," Wald said. "What it creates is an overall index that we're actually kind of neutral on."

Wald sees the MSCI REIT index getting close to support at its 50-day moving average of 1,005. It closed Thursday at 1,014.67.

"If you're looking to trade it, you can buy it here," Wald said. "I'm just a little unsure about the upside potential."

(Watch: A real estate giant turns on to tech incubators)

Portfolio manager Kevin Caron of Stifel's Washington Crossing Advisors doesn't think the MSCI REIT index is a hot investment but should nonetheless be in a portfolio for strategic reasons.

"It's a good diversifier for a portfolio," said Caron, who said his firm owns the index. But, from a valuation perspective, he doesn't see much room to the upside. That's because of the MSCI REIT index's yield is close to that of lower-risk Treasury bonds.

"An average spread might be 100 basis points over Treasurys," Caron said. "Right now, we're about 50 basis points over. So, there's not a lot of meat on the bone for investors as far as yield is concerned."

But Caron doesn't think the MSCI REIT index is completely overvalued, adding, "You still have the advantage of having it being a diversifying asset in a portfolio."

To see the full discussion on the MSCI REIT index, with Wald on the technicals and Caron on the fundamentals, watch the above video. 

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