For example, Japan, Australia, Canada, Germany and France combine for about 23% of GQRE’s weight, putting the ETF in position to benefit from the low rates and easing policies of developed market central banks beyond the Fed. Rates in Japan and the Eurozone are low and expected to remain that way. It is entirely possible the Federal Reserve raises rates before the European Central Bank or the Bank of Japan. [Low Rates Lift International REIT ETFs]
Investors perceive REITs as being risky investment when rates rise because that means more cash will have to be allocated to debt servicing and perhaps diverted away from dividends, the primary reason investors embrace REITs as an asset class.
For now, developed market rate hikes do not appear to be in the cards, boosting the allure of GQRE and its 2.6% dividend yield. That is 45 basis points above 10-year Treasuries.
FlexShares Global Quality Real Estate Index Fund