(Bloomberg News) For the last decade, through two recessions, Michael Agran has dedicated 20 percent of his investment portfolio to real estate investment trusts.

The Los Angeles tax lawyer said he has no plans to diminish his stake in the real estate equities, figuring he can achieve a return of at least 7 percent, through common and preferred shares, even as the prospect of an economic slowdown looms.

"If there's a recession, where am I going to put my money?" Agran said. "Am I going to put it in the bank and earn a quarter of a percent a year? Not going to do that. Am I going to put it in Treasuries?"

Mutual funds that invest in U.S. real estate investment trusts have attracted the most new money since 2006 as buyers seek yield. Investors have added $3.7 billion to REIT funds this year, according to a Sept. 8 report by Citigroup Global Markets, a unit of New York-based Citigroup Inc. Assets in the funds, including exchange-traded funds, are at a record $96 billion, surpassing the prior peak of $87 billion in February 2007, the analysis said.

"REITs are attracting attention because of their income, the dividend yield, and the fact that REITs do own hard assets, which offer inflation protection," said Philip Martin, REIT strategist at Chicago-based research firm Morningstar Inc.

'Starved For Income'

Most REITs are publicly traded companies that own and operate property including apartments, offices, retail, self- storage facilities and hotels. They must distribute at least 90 percent of their taxable income to shareholders annually in the form of dividends. Investors generally pay ordinary income tax on these distributions.

Investors are "so starved for income" that they're lured by REIT yields, said Larry Glazer, a managing partner at Mayflower Advisors in Boston, which has almost $800 million in assets. The securities had an average dividend yield of 3.7 percent as of Sept. 12, according to the Bloomberg REIT Index of 129 publicly traded property owners. That compares with yields on 10-year Treasury notes of about 1.95 percent as of Sept. 12, and 0.02 percent for the seven-day compound yield of the average taxable money-market fund as of Sept. 6, according to research firm iMoneyNet.

"REITs could continue to attract modest amounts of capital given low interest rates," Michael Bilerman, head of the real estate and lodging team at Citi Investment Research & Analysis and author of the firm's Sept. 8 report, said in an e-mail.

Equity REITs give investors dividend yield and the potential for price appreciation, said Mark Biffert, senior REIT and commercial real estate analyst at Bloomberg Industries. The Bloomberg REIT index hit a 52-week high on July 22, before falling 23 percent by Aug. 8, Bloomberg data show.