To say 2014 has been a banner year for shares of real estate investment trusts (REITs) and the exchange traded funds that hold those stocks is an understatement.
Buoyed by sliding 10-year Treasury yields, three of the top 10 sector ETFs this year are REIT funds. The FlexShares Global Quality Real Estate Index Fund (NYSEArca: GQRE) is not one of those funds, but that does not mean investors should sleep on this ETF. Actually, the opposite is true.
GQRE, which debuted in November 2013, tracks the Northern Trust Global Quality Real Estate Index, a fundamentally-weighted index that focuses on commercial and residential REITs. Mortgage REITs, real estate finance companies, mortgage brokers and bankers, commercial and residential real estate brokers and real estate agents and home builders are among the securities that are excluded from the index. [Rookie REIT ETF Shines]
That mixed has helped GQRE to a 13.6% year-to-date gain. That is well ahead of the S&P 500 and the iShares MSCI ACWI ETF (NasdaqGM: ACWI).
GQRE allocates nearly half its weight to U.S.-based REITs, an important factor and one that should serve the ETF well heading into 2015 as the Federal Reserve continues to put off raising interest rates. On that note, GQRE devotes a substantial portion of its geographic weight to countries that appear intent on keeping borrowing costs low for the foreseeable futre.