I'm interested in adding a REIT to my portfolio. The choices range from individual stocks, Exchange Traded Funds, closed end funds and open end funds. I would like a decent yield and some growth. Can those of you invested, please give me some ideas from your good and/or bad experiences. I would add this investment to my IRA.
REIT Investments
- Thread starter chickbull
- Start date
Hyperborea
Thinks s/he gets paid by the post
Vanguard's REIT index fund (VGSIX) is probably your best choice. I wouldn't bother with the ETF unless you have a single lump sum, infrequent large follow on purchases, and some special circumstances (i.e. temporary resident in the US or non-US resident).
unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I'll second that - Vanguard REIT Index is the one I bought in 98 - using IRA money.
Bought it after reading Bernstein's Efficient Frontier article. They prompty went down while the total market went up - just like Bernstein's correlation study implied they would. Should the market for some strange reason take off again - REIT's may get hosed once again. A good counterbalancer.
Bought it after reading Bernstein's Efficient Frontier article. They prompty went down while the total market went up - just like Bernstein's correlation study implied they would. Should the market for some strange reason take off again - REIT's may get hosed once again. A good counterbalancer.
unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Which gets you back to - why you are buying being as important as what you are buying within the context of your overall portfolio - and the purpose of the portfolio itself.
VGISX is a good way to go,pretty hard to beat the index unless you want to bog yourself down with excell spreadsheets and endless number crunching.I chose a handfull of stocks,some on themes,some according to dividend discount model(perhaps a few notches above dart throwing) and also closed end funds,that spin off monthly divvy's at a nice healthy 7-8%.If you want to dive into the fundamental side,check out motley fool REIT Board,get a freebie 30 trial,and gourge yourselves on the posters.Probably the most informed fundamental REIT investors in the galaxy stop in there.Very elightening,but for my style a bit to much # crunching.
I am also a long-term VGSIX investor, but it is probably appropriate to say at this juncture, if you are looking for real access to a non-correlated assets in the commercial real estate segment, you might consider (if your temperament and other circumstances warrant), buying directly into a building. I haven't done it yet, but would certainly like to be part of a group of folks buying into a medical/professional building or something like that. I hear yields are in the mid-to-high teens, very solid renters (physicians) and so forth, which may explain why I don't see these opportunities -- somebody on the inside is already getting them, maybe the doctors themselves.
My point is that illiquid investments like this can be great for the long term investor, but you'll never hear about them from the finance press/industry. Real Estate and Venture Capital/ Private Equity are the two asset classes where the little guy can reasonably hope to make some of these illiquid investments.
Wouldn't do this alone, though, unless I knew a lot more than I do today. Would want to be a limited partner with other people I thought really knew the ropes.
I am looking for research to try to put a number on the 'liquidity premium' that we pay to be in highly liquid investment vehicles like a REIT or a REIT index (but it's hard to do an apples to apples, since so many illiquid investments are also non-diversified, normally a bad thing). My instinct is that we may pay as much as 2% a year in reduced return for similar investments just to have the privilege of cashing it in on a moment or day's notice. If we are long term investors and never spend more than about 4% of the portfolio in a year, we may be paying for a lot of liquidity that we don't need.
ESRBob
My point is that illiquid investments like this can be great for the long term investor, but you'll never hear about them from the finance press/industry. Real Estate and Venture Capital/ Private Equity are the two asset classes where the little guy can reasonably hope to make some of these illiquid investments.
Wouldn't do this alone, though, unless I knew a lot more than I do today. Would want to be a limited partner with other people I thought really knew the ropes.
I am looking for research to try to put a number on the 'liquidity premium' that we pay to be in highly liquid investment vehicles like a REIT or a REIT index (but it's hard to do an apples to apples, since so many illiquid investments are also non-diversified, normally a bad thing). My instinct is that we may pay as much as 2% a year in reduced return for similar investments just to have the privilege of cashing it in on a moment or day's notice. If we are long term investors and never spend more than about 4% of the portfolio in a year, we may be paying for a lot of liquidity that we don't need.
ESRBob
surprised noone mentioned Cohen & Steers, who seem to be the premier managers of Reit funds. I have done a bit of DD and believe the ETF, ICF managed by C&S offers some advantages. Low expenses .35%, excellent managers and good returns that pretty much correlate with their open end fund CSRSX but not as good as Vanguard and trades like a stock. This chart is interesting and you can slide the bar at the bottom to see different periods. If I want to invest in Vanguard, since I don't have an account there, I will have to pay a broker mutual fund commission. With ICF, it trades like a stock so I pay low commissions, no redeptions penalty or minimum holding period. I don't like being locked in, so to speak with mutual fund regulations. JMHO.
http://stockcharts.com/webcgi/perf.html?ICF,CSRSX,vgsix
http://stockcharts.com/webcgi/perf.html?ICF,CSRSX,vgsix
Chick,we'ved owned RQI for almost a year and im satisfied with its return.While it lags the index it spits off a nice +7% divvy,payable monthly.with a -10% discount to nav.By the end of the year i expect it to equal or outperform the index.($RMS)Heres the rest of the portfolio in no particular order
PLC
NNN
PSA
KIM
HCN
BXP
AMB
VNO
RYN
RNP<---looking to sell this fall,% rate sensitive
RQI
Many of these have trounced the indexes by anywhere from several points to 2x.HCN has been the worste performer with a .08% gain thanks to doubling down on the drop off.PCL has been the best with 29.28% gain.My original plan was to dump all but :RQI,PCL,RYN
and by another basket of high yielders at the end of the year.But im so happy with the portfolio and the income it spits off,diversity, that ill probably keep them all.This may change based on my feelings of econ/rate risks.Due to cap appreciation,the portfolio is a bit overwight now,having jumped from 14% to 22.6%,but i can live with those sorts of problems,bit off topic but approx 3 weeks ago i bought UTF another cohen & steers fund,with another nice monthly divvy.(5.9% at time of purchase),and of course currently at a discount to NAV.I expect it to reach its original offering price of $20 over time.I still highly recommend joining the motley fool freebie 30 day trial and check out the REIT board just to get the feet wet .The board is populated with very savvy REIT investors.Some are hard core # crunchers and 2 or so take a simple REIT version of Dogs of the DOW style of yearly portfolio adjustsments which and have easily trounced the indexes.So it can be done,much to the consternation of die hard indexers.Good luck,im all ears--ak
PLC
NNN
PSA
KIM
HCN
BXP
AMB
VNO
RYN
RNP<---looking to sell this fall,% rate sensitive
RQI
Many of these have trounced the indexes by anywhere from several points to 2x.HCN has been the worste performer with a .08% gain thanks to doubling down on the drop off.PCL has been the best with 29.28% gain.My original plan was to dump all but :RQI,PCL,RYN
and by another basket of high yielders at the end of the year.But im so happy with the portfolio and the income it spits off,diversity, that ill probably keep them all.This may change based on my feelings of econ/rate risks.Due to cap appreciation,the portfolio is a bit overwight now,having jumped from 14% to 22.6%,but i can live with those sorts of problems,bit off topic but approx 3 weeks ago i bought UTF another cohen & steers fund,with another nice monthly divvy.(5.9% at time of purchase),and of course currently at a discount to NAV.I expect it to reach its original offering price of $20 over time.I still highly recommend joining the motley fool freebie 30 day trial and check out the REIT board just to get the feet wet .The board is populated with very savvy REIT investors.Some are hard core # crunchers and 2 or so take a simple REIT version of Dogs of the DOW style of yearly portfolio adjustsments which and have easily trounced the indexes.So it can be done,much to the consternation of die hard indexers.Good luck,im all ears--ak
unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
? Who cares if a few REIT stocks outperform the REIT Index by double or triple - its meaningless - especially if you are a diehard indexer holding low correlation assets in an overall portfolio mix.Heh, heh, heh - of course I have this 'liitle' pile of side money in dividend stocks. (buried within are NXL, UDR, WRE along with non REIT stocks).
So what are the names of this years individual REIT's that look interesting again?
I repeat why you own something is much more important than what you own - in many/most cases - unless you are a diehard individual stockpicker - and even there - after one stock - the stat cats
have something to say.
unclemick Who cares if a few REIT stocks outperform the REIT Index by double or triple - its meaningless - especially if you are a diehard indexer holding low correlation assets in an overall portfolio mix. [/quote said:HHmm,i guess it does matter to me and several portfolios.Chalk it up to a strange affinity for things going up in value
And to correllate to your last point.WHEN you buy is JUST as important if not more than WHY.And that is part of the discipline.Beating an index isnt that hard,being disciplined is(speaking for myself)--ak
unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes - I agree - I forgot when(ala Ben Graham).
Being male and not yet dead - not theoretically pure - yadda, yadda - I tend to have long discussions with myself - index, Bernstein/correlation of assets, and of course individual stocks.
Ballpark - 75% balanced index, 10% REIT Index, and 15% dividend type stocks with a tad of Monty Python.
Twist my arm and I'll admit 40% of last years income (60% defined pension) came from dividends. So your individual items named will get researched - always glad for suggestions - thanks.
However - given MY track record over the last thirty years - there's the reason - for me to hold 85% in self balancing index funds. Even though I know better - I trust computers better than my own sterling self discipline - heh.heh.
Being male and not yet dead - not theoretically pure - yadda, yadda - I tend to have long discussions with myself - index, Bernstein/correlation of assets, and of course individual stocks.
Ballpark - 75% balanced index, 10% REIT Index, and 15% dividend type stocks with a tad of Monty Python.
Twist my arm and I'll admit 40% of last years income (60% defined pension) came from dividends. So your individual items named will get researched - always glad for suggestions - thanks.
However - given MY track record over the last thirty years - there's the reason - for me to hold 85% in self balancing index funds. Even though I know better - I trust computers better than my own sterling self discipline - heh.heh.
A couple of names that look awfully interesting. Maybe not right now but on any correction. Any thoughts on IMH and NFI? When I see dividends and growth like these, I always say to myself, must be alot of risk but I don't know how to value these businesses so I just look at what the so called expers, S+P, Reuters, Lehman etc are saying.
AK,
Just curious -- have you done the calculation on your REIT holdings over a few recent years to know how you have fared overall vis-a-vis the VGSIX index?
Also, re: the dogs of the dow method that the MF guys are using to beat the REIT index -- that is interesting. As Fama and French tell us, there is a value premium that persists across markets, countries, eras, but it takes a disciplined systematic approach to capture it. A dogs of the dow method is one, and applying it to new markets sounds promising.
ESRBob
S
sir lurksalot
Guest
I was taking a look at a couple of the REITs listed above and was confused by something I saw for PSA. Moneycentral is listing the earnings per share as 1.20 and the dividend per share as 1.80.
Am I missing something - it looks like they are paying out a dividend that is greater than their profit? I think I must be reading this wrong because although the PE ratio is 43, the stockscouter rating is 9 - meaning strong buy. (Of course, this could be a fine example of how not to use a website's rating system. )
Am I missing something - it looks like they are paying out a dividend that is greater than their profit? I think I must be reading this wrong because although the PE ratio is 43, the stockscouter rating is 9 - meaning strong buy. (Of course, this could be a fine example of how not to use a website's rating system.
)ERBob,
this is the 3 rd time ive written this reply,just figured out i cleared out the cookies file.Dont worry its getting shorter and shorter
No i didnt backtest my portfolio,portfolio was started in 10/03.To be fare to the MF poster and his purely mechanical choices heres his Morningstar.com stock screener perams:
1. Stock Sector: Financial
2. Stock type: Hard Assets (these 2 steps get you the REIT universe)
3. Financial Health grade: A (56 stocks left)
4. Profitability grade: A (45 left)
5. Growth grade: A or B (28 left)
6. Go to Valuation view and sort by dividend yield and pick the top 6.
Cal,as i understand it,P/E's mean practically nothing in terms of trying to put a value on REITS,hope this helps--ak
this is the 3 rd time ive written this reply,just figured out i cleared out the cookies file.Dont worry its getting shorter and shorter
No i didnt backtest my portfolio,portfolio was started in 10/03.To be fare to the MF poster and his purely mechanical choices heres his Morningstar.com stock screener perams:
1. Stock Sector: Financial
2. Stock type: Hard Assets (these 2 steps get you the REIT universe)
3. Financial Health grade: A (56 stocks left)
4. Profitability grade: A (45 left)
5. Growth grade: A or B (28 left)
6. Go to Valuation view and sort by dividend yield and pick the top 6.
Cal,as i understand it,P/E's mean practically nothing in terms of trying to put a value on REITS,hope this helps--ak
ERBob,
this is the 3 rd time ive written this reply,just figured out i cleared out the cookies file.Dont worry its getting shorter and shorter
ak
Ak, thx;
btw, when my web connection or cookies are acting squirrelly and I've written a 'tome' for a posting that I'd hate to re-type, I will often highlight and <ctrl> C it against just such a problem -- frustrating I know!
ESRBob
