The FTSE Nareit All REITs Index posted a total return of 16.14% in H1 and offered a 4.03% dividend yield as of June 30. Equity REITs were up 16.25% with a dividend yield of 3.52%. The S&P 500, by comparison, had a total return of 7.14% and a dividend yield of 2% on June 30.
The top-performing equity REIT sector was the apartments with a 23.54% total return, while Office REITs delivered 17.78%. Closely behind were Health Care REITs and Lodging/Resort REITs at 17.59% and 17.26%, respectively, then Retail REITs at 15.97%.
The Mortgage REITs Index was up 17.73% in H1, with commercial financing up 14.03% and residential up 19.28%.
The iShares Global REIT ETF (REET) will comprise of real estate investment trusts across developed and emerging markets.
The iShares Currency Hedged MSCI EMU ETF (HEZU) will offer investors exposure to the eurozone without the risk of currency fluctuations between the dollar and the euro by tracking the MSCI EMU 100% Hedged to USD Index and investing its assets in iShares MSCI EMU ETF (EZU).
REET will feature an expense ratio of 0.14%, while HEZU will charge 0.51%; both funds will launch tomorrow, July 10th.
FlexShares, the ETF branch of Northern Trust Corp. (NTRS), recently released the FlexShares Global Quality Real Estate Index Fund (GQRE); the firm's first real estate focused ETF.
This new fund, with an expense ratio of 0.45%, will provide investors with and REIT portfolio that provides exposure to the inflation-hedging qualities and long-term capital growth potential of global real estate.
“Research shows that a high-quality, value-focused portfolio of real estate securities may offer attractive returns with less volatility compared to traditional capitalization-weighted global real estate indices,” said Shundrawn Thomas, head of Northern Trust's FlexShares ETF Group, in a press release.
Rising interest rates have brought 4 years of easy gains for the REIT market to a halt and have advisers honing their bets. The board NAREIT All Equity REIT Index is up about 8% this year, not just paling in comparison the S&P 500's 24% gain, but REITs had been up 15% early in 2013 before rates started rising.
On the idea of higher rates hitting relatively-highly levered REITs the most, Andrew Ahrens is looking for REITs with less relative debt on their books. On favorite is the iShares Retail Real Estate Capped ETF (RTL). He's also putting money into foreign-leaning funds such as Cohen & Steers' Global Realty Majors ETF (GRI).
Cohen & Steers portfolio manager Chip McKinley suggests - unlike the U.S. - overseas REITs are only just now beginning to become popular. U.K. real estate companies are up more than 20% this year; Japan more than 40%. Up and comers include Germany and Australia. "Both markets are home to high-quality developers with attractive portfolios that are priced well-below the value of their underlying properties."
Paul Curbo - co-manager of the actively-managed PowerShares Active U.S. Real Estate Fuind (PSR) - likes REITs with shorter-term leases as well as retail operators with more flexibility in setting lease rates.
iShares International Property ETF (WPS)announces quarterly distribution of $0.4984. 30-day SEC yield of 1.73% (as on 05/31/2013). For shareholders of record June 27. Payable July 02. Ex-div date June 25.
Performance of U.S. REITs (IYR, VNQ) has been good, but international REITs like RWX have done even better while sporting higher yields. Greater alpha is nice on the way up, but don't think tighter Fed policy won't hit international REITs even harder than domestic ones, says Stephen Cucchiaro. A compromise might be RWO, which splits its portfolio between the U.S. and overseas.
International allocations are sharply higher at Windhaven Asset Management - an arm of Schwab and the biggest player in ETF-managed portfolios. Favorites are international real-estate ETFs (WPS an example), Hong Kong (EWH) and Germany (EWG). Domestically, the funds are overweight tech (QQQ).
International REITs? Like $IFGL or $WPS? Forget it. Too thinly traded, no option chains.
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WPS vs. ETF Alternatives
The iShares S&P Developed ex-U.S. Property Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Developed ex US Property Index.
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