REITS Anyone?

[UnrealizedPotential]

I own a REIT fund and I have since 2007.It is 13% of my Portfolio assets.So,for those owning REITS how did you decide what percentage to allocate to REITS ?I like REITS because it pays dividends and I can participate in Real Estate without having to fix any plumbing problems and do not have to deal with a mortgage.

 

[target2019]

We have 4.9% allocated to Vanguard US REIT, and that is in my Roth IRA. When the subject of REIT comes up, usually one hears 5-10% allocation recommended, although some disregard it entirely, and others have more (such as you).

When in-laws sold their home (about 15% of their assets at the time) we added the proceeds to their brokerage account. I developed a plan for investing so that we could diversify more than their managed accounts do, and have executed that partially. Currently have 4.1% in REITs, such as HCP INC (HCP), Healthcare TR Amer Inc (HTA), Vanguard Global EX-US Real VNQI, Realty Income Corp (O), iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. (IFGL).

I'd like to do more with REITs, but will wait for lower prices. This is a taxable brokerage account for in-laws, so that keeps me from going much further. Tax bracket is important. I will stay with 5% allocation as the absolute limit for them.

 

[RonBoyd]

We have three REIT ETFs in our Portfolio (RWX, VNQ, & ICF) representing 12.1 % (as of yesterday's close). The performance (since purchase) of these three are:

(Gains vs Cost)
RWX = +7.3%
VNQ = +32.0%
ICF = +10.6%

We have held VNQ for about six years now and the others less than two. This includes Dividends.

 

[utrecht]

I have about 10% in VNQ. This is my long term AA. I just trimmed it down from 13% after a nice YTD return so far.

 

[jerome len]

I too have about 5% of my Vanguard account in their REIT. As my Dad used to say, "they can't make any more land so over the long term the price has to go up" To me it's the best diversification from Stocks and Bonds. Also, many of the financial sources recommend Vanguard since their costs are so low.

 

[Mr._Graybeard]

I just got a pitch from Schwab about a new global real estate index fund they're opening. It will track the Russell Fundamental Global Select Real Estate Index -- major foreign holdings look pretty similar to Vanguard's VGRLX. Any thoughts on that one? Expenses are 0.49%, which seems pretty reasonable for a global REIT fund.

 

[haha]

I just got a pitch from Schwab about a new global real estate index fund they're opening. It will track the Russell Fundamental Global Select Real Estate Index -- major foreign holdings look pretty similar to Vanguard's VGRLX. Any thoughts on that one? Expenses are 0.49%, which seems pretty reasonable for a global REIT fund.

By what method do they attempt to track this index?

Ha

 

[retire2020]

8% currently in 401K(DFGEX) and goal is to have 10% of total portfolio.

 

[Senator]

I have my own REIT, with about 50% of my net worth in it. I get ~10% of the equity I have returned as income (after all expenses and allocations).

It's not a 'real' publicly traded REIT, but it is real for me.

 

[jollystomper]

We have about 4% of our investments in a REIT fund and a REIT stock. The Megacorp provided financial advisor suggested we increase that to 6%, to gain more dividend income.

 

[target2019]

I just got a pitch from Schwab about a new global real estate index fund they're opening. It will track the Russell Fundamental Global Select Real Estate Index -- major foreign holdings look pretty similar to Vanguard's VGRLX. Any thoughts on that one? Expenses are 0.49%, which seems pretty reasonable for a global REIT fund.

I think many funds are getting and staying competitive. I went with VNQ-I and IFGL. The latter has a 7-year track record.

Maybe Schwab can hit a grand slam for you.

 

[Surewhitey]

Got some NLY and AGNC...maybe 9-10% of stock portfolio. Mom has some NLY, half bought in Jan of this year...

 

[sengsational]

In this thread there is an example asset allocation for a grouping called "hard assets" which includes not only REIT, but also natural resources stocks. There's a calculator that has one financial analyst's idea of what a good allocation would be: Gone Fishing Portfolio. So for instance, that says that 18% allocation to hard assets for a 40 year old, with a 60-40 split natural resources to REIT.

 

[Ginny]

We have rental real estate which we are selling. I will invest a portion of our proceeds in one or more of Vanguard REIT funds.

 

[Looking4Ward]

I think REIT's should be the poster child for chasing performance.

I got out of REIT's (large position in AGNC with a minor position in VNQ) last year when I realized I had bought high and then saw just how sensitive they can be to rising rates.

Their resurgence in the past year is due primarily to rates dropping a bit rather than rising; personally I'm going to wait and see what happens when rates finally do start to rise before I commit up to 5% of my portfolio to them, as I think I would be repeating my mistake if I were to get back into them right now.

Agency REIT's, obviously, are the most vulnerable.

 

[RockyMtn]

REIT's (VNQ) are 2.5% of our portfolio. A bit light but have 3 houses that cover the rest of my real estate allocation. Working to get that to one house and will lift REIT allocation at that point.

 

[target2019]

In this thread there is an example asset allocation for a grouping called "hard assets" which includes not only REIT, but also natural resources stocks. There's a calculator that has one financial analyst's idea of what a good allocation would be: Gone Fishing Portfolio. So for instance, that says that 18% allocation to hard assets for a 40 year old, with a 60-40 split natural resources to REIT.

Can you supply examples of each type of hard asset stock? That was mentioned in the other thread, but I didn't see the source of the graphic you posted. I'm interested...

 

[Cassie]

This may be a dumb question, however, do you buy REITS/ETF's like VNQ and hold them? Or do you buy low, sell high and re-buy. Thanks

 

[UnrealizedPotential]

This may be a dumb question, however, do you buy REITS/ETF's like VNQ and hold them? Or do you buy low, sell high and re-buy. Thanks

I think it's a fair question.I can only tell you what I do.If you reinvest all the dividends including any capital gains then I think it makes sense to hold onto it through good times and bad.Some might sell and then wait to reenter the market.But,when do you get back in?So for me I just hold on and stay the course.

 

[Mr._Graybeard]

By what method do they attempt to track this index?

Ha

Good question, since it's one I don't have an answer for. I'd assume they'd buy the same holdings the index weights in the same proportions, but I don't know that for sure. I'll do some homework.

 

[target2019]

Can you supply examples of each type of hard asset stock? That was mentioned in the other thread, but I didn't see the source of the graphic you posted. I'm interested...

Found my answer in the Gone Fishing article you linked.

The S&P North American Natural Resources Index tracks hard assets. It consists of 62% energy and 15% metals and mining. These top-10 stocks represent about 43% of its holdings: Chevron, Exxon Mobil, Schlumberger, ConocoPhillips, Occidental Petroleum, Suncor, Freeport-McMoRan Copper, Apache, Barrick Gold and Halliburton.

I'm not sure REITs fall into this hard asset category so well. Will read the Gone Fishin article a few times...

 

[target2019]

This may be a dumb question, however, do you buy REITS/ETF's like VNQ and hold them? Or do you buy low, sell high and re-buy. Thanks

I intend to buy and hold these things almost forever.

 

[ESRwannabe]

My Roth IRA was 100% reits until very recently which is about 24% of my AA. They have had a great run. I just moved all that money to a balanced fund (vanguard managed payout) as I am making my portfolio less risky.

I like REITs but they are expensive right now as are most stocks. Going by past experience if there is a correction REITs will really get walloped hard.

 

[CyclingInvestor]

I am a big fan of high quality (IMO) REITS and at times have had up to a 100% allocation to them when they were cheap and everything else I followed was high (1999-2005).

Currently I consider them somewhat more overpriced than the other stocks I follow, and am out of them.

 

[jimnjana]

I'm down to just ARCP, AAR, AMT and O. AMT is a cell tower company which converted to a REIT in the last yr or two. Cell tower business is a good business to be in IMO. O is O-kay with me. AAR is an MREIT that is actually positioned for rising interest rates, but NAV continues to erode in the meantime. ARCP has stabilized after growing too fast and wandering from their core strength. REITS make up less than 10% of my portfolio. I like them the ROTH IRA as their dividends are not qualified.