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The REITs In The New S&P 11th Sector

Sep. 01, 2016 4:01 PM ETVNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, SEVN, REK, FRI, DRA, USRT, FREL, LRET, PSR, WREI, XLRE, IARAX5 Comments
Easan Katir profile picture
Easan Katir
62 Followers

Summary

  • New REIT sector to begin September 1st.
  • Only eREITs will be included.
  • Which will funds choose? Slam Dunks and Complete List of Possibilities.

With the unveiling of the new S&P 500 sector this Wednesday, increasing numbers of investors are turning their attention to real estate markets -- specifically REITs. We have created a short list of the major companies which will be in new REIT funds as well as provided a complete GICS spreadsheet of possibilities sent to us by the GICS Committee Chair himself. One can assume these stocks on our list will be prominent in new funds because they are currently listed in the S&P 500. It is important to note that the MSCI has stated that mREITs will not be included in this new sector; only eREITs.

In years past institutional investors have tended to avoid REITs because their financials and resultant P/E ratios look different due to the large depreciation numbers which reduce taxable income. Consequently REITs didn't fit into their normal growth models. With the advent of this new sector managers will need to allocate or explain to trustees why they haven't. Billions will flow into equity REITs. We predict Real Estate sector funds will be a new option in the few choices offered by the 401(k) plans of large companies.

Here is a short list of major REITs which will be included. This is based on information provided by MSCI, S&P 500, Dow Jones, and a number of REIT analysts. Here's a video discussion with David Blitzer, PhD, Managing Director and Chairman of the Index Committee S&P Dow Jones Indices. Yesterday David sent us a full list of Global Industry Classification Standard (GICS) worldwide changes for September. GICS is the taxonomy developed in 1999 by Dow Jones and Standard & Poor's for use by the financial community. This is the first time since then the Committee has created a new major sector. Click here to see

This article was written by

Easan Katir profile picture
62 Followers
With a 33-year history across diverse sectors and market conditions, Easan Katir, a fiduciary Registered Investment Advisor and a member of the Financial Industry Regulatory Authority, manages wealth for families, individuals and retirement plans. He has appeared on financial television and co-hosted a syndicated radio talk show "It's Your Money". He has written about behavioral finance, based on three years of personal mentorship by the legendary Ed Seykota. Katir served as Chairman of Morgan Parsons Inc, with $10 million in sales and 400 employees, which merged with a public company. He graduated from the University of Southern California financial planning program in 1985, and though he does not practice as a CFP now, earned a CFP designation the same year.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in XLF, AMT, CCI, WY, DLR, VTR, VNO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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