“The fund also holds a meaningful stake (about 20%) in emerging-markets firms,” according to Morningstar. “Over the long term, emerging-markets real estate firms should benefit from rising incomes and consumer spending, which will drive demand for high-quality spaces, slowly boost rents, and increase occupancy rates. Growth in shopping centers and office space should provide a lift for commercial real estate firms and REITs.”
International REITs may offer diversification benefits as individual property sectors behave differently from one country to another due to different economic and local circumstances. International real estate has generally demonstrated imperfect correlation relative to U.S. real estate over time, which has led to lower volatility and potentially greater risk-adjusted returns.
Morningstar has a Bronze rating on VNQI.
For more information on real estate investment trusts, visit our REITs category.