Fidelity International Real Estate Fund

[Gone4Good]

Has anyone looked into this, or a similar, fund FIREX?

The expenses are quite high at 1.25% but the idea of international real estate exposure tickles my fancy of finding new eggs for the basket. I haven't spent any time following trends in international real estate but I've heard many areas are at least as ridiculous as here in the states. Top concentrations for the fund are in Japan (22.2%), UK (21.1%), Australia (19.6%), and Hong Kong (12.4%). I remember hearing that Japan real estate is turning the corner and Australia's boom has already "bust" but don't really know.

Any thoughts?

 

[Merlin]

Well, I recently took about a 1% position in this fund.  I like the idea of adding real estate and international diversification with just one fund.  I have a similar position in Third Avenue Real Estate Value.  When REITs and real estate in general correct, I plan to take my total real estate allocation to around 10% of my portfolio.  I will use these two funds plus Vanguard REIT Index.

 

[tlg501]

I also put about 1% in this fund, it's my one truely speculative hunch,

 

[cons]

f you are looking for the diversification offered by international real estate, you should consider both at foreign residential property and foreign commercial property.

Many expatriates buy foreign residential properties (as vacation or retirement homes) and pay the mortgage loan in the currency of country where they get their salary income. For example, lots of expats in Hong Kong buy vacation homes in Thailand or Japanese locals buy retirement homes in Bali or the Philippines. International banks make this process relatively painless these days.

On the foreign commercial side, most foreign markets have not historically had significant securitization of commercial real property. That is now changing, as the REIT concept (or similar legal entities) is coming into availability in more and more countries. This will greatly increase the liquidity of these markets.

The Fidelity fund is pretty new. I would recommend the long running Alpine International Real Estate fund (EGLRX). Same manager for almost 20 years and a pretty good record over 3, 5 and 10 years. Although the E/R is high compared to say the S&P 500, it cannot be cheap to manage across so many countries in a market space that is notoriously fragmented.

FYI, the fund's portfolio does hold foreign REITs but due to their general lack of availability, the majority of the holdings are in property companies' stock. It also currently has about a 15% US exposure. The initial investment requirement is only $1,000.

i also think that fidelity just changed managers for this fund, Matthew Lentz i believe just started managing this fund on January 12, 2006.

 

[lswswein]

The expenses are quite high at 1.25% but the idea of international real estate exposure tickles my fancy of finding new eggs for the basket. 

Any thoughts?

Stupid Question: Considering the high ER would you get the same effect on the portfolio if you added US REIT's for an ER of 0.21% and TM Intl at 0.23%. Your ER would be less by almost 1%. Btw I love new asset classes but this idea of getting equivalent stuff is interesting too. I think I learnt it from someone on the message boards. The performance I think  won't match exactly but if it correlates 80% and ER is less by 1% would you consider it?

-h

 

[bpp]

Stupid Question: Considering the high ER would you get the same effect on the portfolio if you added US REIT's for an ER of 0.21% and TM Intl at 0.23%.[...]The performance I think won't match exactly but if it correlates 80% and ER is less by 1% would you consider it?

Stupid Answer: Offhand, that doesn't look like it would be equivalent at all. I would be surprised if the correlation were 80%, but even if it happened by chance to be so in the past, I don't see a fundamental reason for it to be so in the future. But I may well be missing something.

Bpp

 

[Gone4Good]

Stupid Question: Considering the high ER would you get the same effect on the portfolio if you added US REIT's for an ER of 0.21% and TM Intl at 0.23%. Your ER would be less by almost 1%. Btw I love new asset classes but this idea of getting equivalent stuff is interesting too. I think I learnt it from someone on the message boards. The performance I think  won't match exactly but if it correlates 80% and ER is less by 1% would you consider it?

-h

I don't think you accomplish the same thing by investing in domestic REITs and international equities. I already have international equity and fixed income investments, so it is not just the "international" factor that draws me to this fund. I also own domestic REITS, so it is not just the concept of investing in "real estate" that attracts me. It is the thought that real estate will perform differently from both equities and bonds and that international real estate will perform differently from the domestic real estate, domestic equities, domestic bonds, foreign bonds and foreign equities I already own, that intrigues me. Whether it is worth the extra expenses is a legitimate question.