Inflation is something everyone in Canada is feeling right now. Groceries cost more, rent is up, and just about everything else has a higher price tag than it did a year ago. This eats away at your savings, leaving a lot of people wondering, “How do I protect my money from inflation in Canada?” If you’re trying to figure out the best investments during inflation in Canada, real estate mutual fund trusts are proving to be a smart option in 2025.

Why Real Estate Mutual Fund Trusts Are on Investors’ Radar

There’s no single investment that solves inflation for everyone, but history shows that real assets, like property, usually hold up when prices rise. That’s why people searching for how to hedge against inflation in Canada often land on real estate.

Traditional real estate investing was all about buying a condo or rental property, takes a lot of cash and comes with headaches. Real estate mutual fund trusts make it possible for everyday Canadians to pool their money and own a slice of many different properties, all managed by professionals. These trusts spread your risk, let you access many different types of properties, and give you the benefit of expert management.

Real Estate and Inflation: What’s the Connection?

When inflation rises, it hits every part of the economy. But certain assets are better at keeping pace. Over the years, Canadian property values and rents have generally outpaced inflation, making real estate one of the most reliable inflation proof investments for 2025. So when people ask, “Does real estate beat inflation?” The answer, especially over the long term, is usually yes.

This is because rents tend to go up with inflation, and property values increase as the cost of building and maintaining real estate rises. This is why real estate is often seen as a hedge against inflation. In 2025, this remains true, and mutual fund trusts let you get in without needing to buy an entire building.

What’s Happening in 2025: Market Research and Industry Trends

According to the latest market research, the Canadian Real Estate Investment Trust (REIT) industry—the backbone of most real estate mutual fund trusts—has faced its share of headwinds in recent years. Interest rates rose, making borrowing more expensive. But in 2025, things are starting to look better. The Bank of Canada has lowered rates, which is helping REITs refinance debt at better rates and invest in new properties.

This accommodative financing environment makes it easier for real estate trusts to expand, buy new assets, and weather any short-term dips in income. Even though the industry’s revenue had dropped over the last few years, it’s now set to climb again. Industry analysts expect REITs to post total returns of 20% to 25% in 2025, with a good portion of that coming from regular distributions to investors. That’s a strong case for those seeking inflation beating investments in Canada.

Where Real Estate Mutual Fund Trusts Are Putting Their Money

Most real estate mutual fund trusts invest in what the industry calls “income-producing properties.” This includes shopping centers, rental apartments, warehouses, and sometimes more specialized spaces like data centers. In 2025, there’s a notable trend: REITs are moving into newer asset classes like data centers and purpose-built rentals, which can offer higher yields and more stability.

Canadian cities are dense—unlike the U.S., our population is clustered in a few urban areas. This makes these hotspots highly attractive for real estate trusts, since steady demand keeps properties occupied and rents coming in. Real estate investing during inflation works best in places where people need to live, shop, and work no matter what’s happening in the broader economy.

Why These Trusts Are Working as an Inflation Hedge in 2025

Let’s break down what’s driving the strong performance of real estate mutual fund trusts this year:

1. Lower Borrowing Costs

The Bank of Canada’s decision to cut rates means trusts can borrow more affordably. They can refinance old debt and lock in new loans at lower interest, improving their bottom line. This reduces financial pressure and supports higher payouts to investors—one of the reasons real estate mutual fund trusts are seen as best assets during inflation.

2. Rising Rental Income

Many property leases in Canada have rent escalations built in, meaning rents automatically go up over time. As inflation pushes up prices, property owners can pass some of those increases onto tenants. This is especially true in retail and multifamily housing, two sectors that analysts say are top picks for 2025.

3. Diversification and New Asset Classes

Trusts are adding new property types, like data centers, to their portfolios. This helps reduce risk and allows them to capture higher yields from sectors that aren’t as affected by economic swings. Diversification is critical for alternative investments to beat inflation.

4. Healthy Demand in Key Sectors

Even though office space is out of favor right now, shopping centers and rental apartments are seeing steady demand. According to Canaccord Genuity and CBRE, rental rates are often below current market rates, which means there’s room for income growth as leases roll over and are renewed at higher prices.

5. Expert Management

Professional managers run these trusts. They know how to spot opportunities, avoid pitfalls, and keep costs under control. In a market with some uncertainty, this experience makes a big difference and keeps real estate mutual fund trusts working as a real estate hedge against inflation.

How Are Canadian REITs Expected to Perform in 2025?

Analysts from several major firms predict Canadian REITs could see returns of up to 25% this year, with around 5% coming from distributions (the money paid out to investors) and the rest from rising property values. The market is still adjusting to interest rate cuts, but a lot of the groundwork for a strong rebound is in place.

Some caution remains, as there’s still uncertainty about the Canadian economy, potential new tariffs, and the timing of future rate changes. But with property fundamentals holding up and a more stable outlook on rates, most industry watchers believe Canadian real estate is set for a strong year. That’s why, if you’re looking at real estate vs inflation in Canada, now could be the time to invest.

What to Look for in a Real Estate Mutual Fund Trust

Not all trusts are the same. When thinking about how to hedge against inflation in Canada using real estate, look for funds that:

• Hold properties in high-demand areas, especially large cities

• Offer steady and reliable distributions

• Are run by experienced management teams

• Invest in a mix of traditional and new property types (like data centers)

• Keep their costs and fees reasonable

Transparency is key. You should be able to see exactly what types of assets your money is going into, how past returns have looked, and what the outlook is for the properties in the trust.

Real Assets vs. Other Inflation Hedges

There are other ways to invest to beat inflation, like buying gold, infrastructure, or commodity funds. But real estate stands out for a few reasons:

• Regular income: Properties throw off cash every month from rent.

• Growth: Property values tend to rise with inflation over time.

• Stability: Demand for homes, retail, and certain commercial spaces remains even when the economy is uncertain.

• Accessibility: Real estate mutual fund trusts let you start with much less capital than buying a property on your own.

If you’re wondering, “Is property a good hedge against inflation?” or “Does real estate beat inflation?” the numbers from the last decade and the forecasts for 2025 make a strong case for “yes,” especially when you invest through a diversified, professionally managed fund.

Conclusion

Canadian real estate mutual fund trusts are offering investors a real chance to keep pace with inflation in 2025. By pooling money into income-producing properties, managed by experts, these funds give Canadians a simple way to stay ahead of rising prices and grow their wealth with confidence.