Commercial real estate exchange traded funds (ETFs) and the sector they track may have bottomed, according to one person. If that’s so, you can get in on the action via several different funds.
Recent data suggest that property values are stabilizing. James B. Stewart for The Wall Street Journal reports that many big real estate borrowers have gotten banks to refinance and avoid outright defaults. Many experts suggest an allocation to real estate as an inflation hedge, a diversifier and volatility cushion (although this wasn’t the case when the markets collapsed in 2008). [Commercial Real Estate ETFs At the Bottom?]
ETFs make access to this sector of the market simple, since getting into it directly or via real estate partnership only really makes sense for the largest of investors. It’s easy for individuals to gain access to low-minimum, low-cost, highly diversified real estate portfolios through the use of ETFs, including the two funds listed below. [The Future of Commercial Real Estate ETFs.]
For more stories about commercial real estate, visit our commercial real estate category.
- Vanguard REIT Vipers (NYSEArca: VNQ): A large, actively traded, very liquid, and boasts a low expense ratio—just 0.13%; broad exposure to office buildings, shopping malls, apartment complexes, storage facilities and hotels.
- SPDR Dow Jones International Real Estate (NYSEArca: RSW): Tracks the performance of the Dow Jones Global ex-U.S. Select Real Estate Securities Index, which is heavily weighted toward developed Asia and Europe, with little exposure to China and other emerging markets. Expense ratio is 0.59%; relatively low exposure to hotels and resorts.
Tisha Guerrero contributed to this article.
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.