The folks at streetTRACKS listed an international REIT ETF under ticker RWX (hat tip to Jen Ryan at TheStreet.com). You can link out to the PDF fact sheet here.
Australia is the largest holding at 19.65%, then UK at 18.92%, Japan at 17.28% and then a bunch (20) more including Chile with much smaller weights. The subsector make up is tough to get a handle on because 56% is other. The PDF says the yield is 2.6% but a phone call to StateStreet said 3.1%; maybe the difference is the 0.60% expense (I am aware those numbers don't add up).
I know people have been very hungry for this and more are on the way but I have trouble getting very excited. There has been chatter about US REITs being over priced based on relatively low yields, on a historical basis. I am not sure where 2.6% or 3.1% compares for the international segment but it does not seem that compelling.
I have had the same position for clients, just one holding for most folks, for ages. My REIT (individual name not an ETF) has done well but I have no plans to add more or switch. There are fundamental issues with the real estate markets in Australia, UK and Japan that might outweigh the positives; this is something you should study if you are considering this new fund.
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11 comments:
I am glad someone finally came up with an international REIT ETF. For a long time Alpine's EGLRX has been the only such fund I knew. Just plot IYR with EGLRX with any given time period you will be impressed with EGLRX. I am not sure a typical international fund will capture the movements in an international REIT. For me my REIT portion of porfolio is mainly consisted of FIREX and EGLRX with 1/3 TAREX. I am very happy for this combo from a retrun to risk point of view. BTW, EGLRX and FIREX have YTD of 37-38%.
For once I am glad I am an individual investor not a fund manager because it probably would cost more for an investor to invest mutual fund through an wealth advisor!
This is a nice offering but unfortunately the timing isn't good. I would like to eventually have REITs (both US and international) to my diversifed portfolio but they seem very pricey right now.
Not all of these companies are REITs as we would know them in the US. For example the UK is on the cusp of allowing for REITs, but existing listed property companies are not exactly REITs.
In a number of places in the world, the REIT/CRE bubble is worse than in the US.
This International REIT ETF will allow investors to add some zest to their portfolio.
International real estate has been neglected by the fund industry. Like any other sector, it will have ups and downs. This one ETF,at this time, gives the investor a gateway to an extremely difficult roster of companies to locate and purchase.
That said, I am not going to rush out and buy this ETF tomorrow.
For the same of argument I am going to take the contrarian view. On both fronts. I use to see the prorogation of ETFs as a mar that represented something bad to come. I have since become a believer that if an ETFs run at a reasonable price to funds ratio and a low fee it is, or can be, a valuable tool if the markets are viewed at a macro level. Projecting large and slow moving changes are often easier than movements over a finite period of time. An array of ETFs allow traders to capture that momentum without choosing the absolute winner in a given stratum.
To continue my opposition I would argue that if we believe that the globalization or any other flattening affect on the world will more evenly distribute incomes and wages then the rest of the world will continue to grow relative to US. I am going to say that if one is willing to buy foreign currencies then this ETF (or a similar one) will allow an owner to capture the same gain plus the localized increase in real estate properties. Yes there is some added risk however this fund specializes in a traditionally stable arena and is quite broad with regard to counties and economies.
Regarding one night in Bangkok; michaelcampion said 'I would argue that if we believe that the globalization or any other flattening affect on the world will more evenly distribute incomes and wages then the rest of the world will continue to grow relative to US.' Does this also mitigate risk? If emerging markets become less 'emerging' it stands to reason that the PE's of emerging markets should also go up. If the structural changes made to their markets promote transparency. For me, the risky part of investing in Thailand is the question 'Whats next?' I need to be more like Alfred E Neuman.
http://en.wikipedia.org/wiki/Image:Alfred.jpg Merry ChristChanRamaKwanzaa! Don't eat too much. Tom in Indy
The question is whether to keep FIREX or buy the new RWX, i.e. is active management worth the extra .5% when it comes to the international real estate market? Any thoughts?
I found this a most interesting article. http://streetlightblog.blogspot.com/2006/12/adventures-in-capital-controls.html
Take a look when you get chance...
MC, the link truncated so any readers wanting to check it out can click here to read it.
I am a new investor in the REIT world and I do not presume to know what's right and what's wrong. That said I will admit that I have invested in stocks for many years but only lately have I had time to really spend time trying to actively manage them.
I am very enthusiastic about the idea of an International REIT ETF because I believe it offers the chance for the me to participate in gains and diversification that is reserved for the "Big guys". It also offers a "late comer" like myself to participate in some of the remarkable gains available in REITs.
I see US REITs as risky (compared to International REITs) in as much as they have been appreciating for years now (witness the drop in dividend returns). I also suppose the herd instinct
must be taking hold by now (Though in real estate that is no indicator of immediate collapse!)
That said, I would prefer to own real estate in places where the real estate bug is just taking hold. That, in a way, assures me that I am less likely to be the "greater fool" . Instead someone far in the future will be that person.
Much of the world is less sophisticated than the US in its investing and in the breadth of its base of investors (By this I mean, the average joe
trying to make money in the markets). But I am an optimist, and as wealth is made abroad, and the middle classes grow and learn what to invest in, I believe International REITs will strengthen in demand.
I am excited that I can buy in to the "bottom" so to speak. I think I haver a better chance of seeing high returns than by entering a maturing market that we see in the US.
As I said in the beginning, I have only recently
focused my energy on actively managing my stocks. Equities are a large portion of my holdings and I want an investment that will grow but will not fluctuate in lock step with all my other investments. I think owning real estate worldwide will give me that assurance.
February 27th '07
Maybe tomorrow would be a good time to buy into an Int'l REIT. Hmmmm.
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