Investing in REITs Wednesday, June 4, 2008
Posted by ei-forum in ETFs.trackback
With the market heading towards another pull back, the Enterprising Investor should be looking to take advantage of this volatility in order to secure superior long-term returns.
With a current yield of over 5% the Vanguard SF REIT ETF (VNQ) looks pretty interesting to us and a move back into the low 60s would definitely represent a good buying opportunity.
The investment seeks income and moderate long-term capital growth. The fund normally invests at least 98% of assets in stocks of real estate investment trusts (REITs) that are included in the Morgan Stanley REIT index.
This is a great and cost efficient way for investors seeking real estate exposure in their portfolio but that want to limit extreme volatility or the complete loss of capital that could come with picking individual REIT at this specific moment in time.
We all know, that the credit crunch is placing a lot of stress on housing markets but long-term, private and especially, commercial real-estate will continue to appreciate in value and offer good returns to patient investors.
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REITs are a good inflation hedge but be prepared for volatility. Enjoy the high yield but invest in a tax advantaged account as the dividends are non-qualifying. Every portfolio should have some exposure to REITs.