The four major asset classes for exchange traded fund (ETF) and other investing are: stocks, bonds, cash and real estate.
You can get direct exposure to real estate by actually owning it. The second best option is REITs, or real estate investment trusts.
Richard Shaw for Seeking Alpha reports that the yield of a REIT tends to make them trade like bonds, but because they are hybrid in nature, they are mistaken for an asset class of their own instead of a separate sector within a stock asset class.
The number of "world ex-US" ETFs have proliferated over the years, but they contain real estate management companies, land developers, builders, brokers, and other non-REIT types, making them less obvious than a pure REIT play.
Shaw compares the performance of three international real estate funds with one U.S. REIT index fund:
- Vanguard REIT Index ETF (VNQ): up 3.8% year-to-date; yield 4.75%
- SPDR Dow Jones Wilshire Intl Real Estate (RWX): down 7.9% year-to-date; yield 3.45%
- WisdomTree International Real Estate (DRW): down 17.4% year-to-date; yield n/a
- iShares S&P World ex-US Property Index (WPS): down 11.9% year-to-date; yield 2.04%
- iShares FTSE EPRA/NAREIT Global RE ex-US (IFGL): down 12.4% year-to-date; yield 2.25%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.