I've recently changed my portfolio balance to favor REIT's over VTSAX (60% REITs /30% VTSAX /10% bonds).
I'm short the SPY (S&P 500) through the rest of 2016 - primarily because bull markets typically reach new high's within a year of their previous highs, and the current market's last 'high' was in May 2015. I think we're more likely to see the markets move sideways or down rather than up. This regardless of which presidential candidate wins in Nov (IMHO, Trump will print money to pay for tax cuts, Hilary will print money to pay for military increases; neither of which we as investors have any control over, so I can't worry about it.)
Based on the real-estate market being really hot, (especially in Seattle) and not in the same way it was in 2007, but in a more sustainable but still constantly upward trend movement, I decided to move to REITS - and be a lazy landlord, taking advantage of the upward move in real-estate without buying more houses (
as MMM puts it). People are still going to need places to live no matter what happens on the macro economic front, so from that perspective I think the real-estate market will be more reliable than the overall market this year (and possibly the next 4 years).
In Seattle, it's almost impossible to buy a home today - supply is low, and demand is very high, so prices are up, similar to the story in the CA-Bay-Area. I was researching ways to get more exposure in my own retirement accounts, did the math on several REIT's, and liked what I was seeing. So I've moved to split my 60% into 3 different REIT's, 20% each (SNH, LADR, and NRZ). So far, I'm up 15% in price+dividends since March (mostly SNH), and more dividends to come later in the year.
For more reading, read the contributor who has a similar viewpoint on the markets "The Fortune Teller" on Seeking Alpha -
start here.
From my perspective, I'd go with option 1 - split the difference between the two REIT products, but you should do more homework on REIT's before you make any changes.