Corporate focus, variously described as specialization, diversification or core competency ñ and the associated costs and benefits ñ is one of the fundamental and most discussed issues in business administration. Although the subject has been investigated by various researchers for real estate investment trusts (REITs) on an aggregate level, the findings regarding specialization or diversification strategies and performance within the REIT arena as well as the role of REIT (sub)sectors in single- and mixed-asset portfolios remains inconclusive. Because investors increasingly base investment decisions into real estate on performance measurement, professional evaluation of fund strategies and the issue of (out) performance have noticeably gained importance in the recent past. This development is underscored by the growing importance of real estate as an asset class in respect to Ä42 billion actually allocated to global real estate investments with a buoyant tendency. Furthermore, the ascending competition in the asset- and wealth-management industry as well as the question of performance-based pay of investment managers made the issue of (out) performance and management strategies regarding focus or diversification a fundamental topic on the agenda of investors and asset managers. Drawing on the results of the 2005 fund manager survey, managers are evenly spread when it comes to the focus of future vehicles. Even though evidence indicates that investors clearly plot an indirect route for new vehicles, manager in Europe struggle to meet investors¥ demand for sector focused vehicles. On the contrary, REITs in the U.S. offer investors the possibility of investing in selected property types and regions. Although various studies have demonstrated the intuitively appealing benefits of property type specialization for public real estate firms, there is only moderate consensus on an optimal strategy and the related empirical research remained indecisive. In particular, the linkage between the degree of specialization and knowledge as a determinant of superior performance is unclear.