REIT question

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Re: REIT question

Postby midareff » Sat Aug 31, 2013 11:55 am

Prospects are always unknown since predicting the market is not within the realm of mortals. I have no idea whether they will continue to decline or reverse course but since it is down about 17% from peak and yielding 3.91% (last couple of days) it seemed like a nice opportunity to reset the fund to its balance band value.
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Re: REIT question

Postby YDNAL » Sat Aug 31, 2013 4:24 pm

trkymn6f0 wrote:let me rephrase the question...do reit funds typically fall or rise with increases in interest rates? don't reits invest in properties through margin accounts and acquire more assets when mortgage interest rates are lower?

Welcome to the Forum, trkymn6f0 !!

REITs are "companies" with high leverage and unique tax consideration.
  • A "separate asset class".... NO!
    A company that doesn't manufacture computers, drugs, 767 aircrafts; or sell software.... YES!
  • The current largest REIT [company] holding in Vanguard VGSIX is Simon Property Group Inc.
  • Simon's balance sheet as of 12/31/2012 shows total assets of $32.4 billion of which Property Plant & Equipment is $25.2 billion. You also see $26.5 billion in Liabilities of which $23.1 billion is long-term debt.
    http://finance.yahoo.com/q/bs?s=SPG+Bal ... eet&annual
Unless you understand what you buy, don't buy it. Your original post, and the follow-up quoted above suggests much room for improvement.
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Re: REIT question

Postby abuss368 » Sat Aug 31, 2013 7:01 pm

InvestorNewb wrote:
abuss368 wrote:
InvestorNewb wrote:
abuss368 wrote:Read "Unconventional Success" by David Swensen. He recommends 20% (30% of equity) allocated to REITs. He specifically mentions the Vanguard REIT fund (not the international fund).


With REITs down lower than what I bought my shares at 6 months ago, I'm thinking about buying more. I have some room in my tax-deferred account.

Is David Swensen still recommending 20% allocation to REITs? I thought he brought this down to 15% or so. I'm curious why he doesn't mention the international fund. Maybe it's too new, but it would be good to get expert opinions on VNQI.


I attended a lecture of David Swensen's last year and he recommended the portfolio as noted in Unconventional Success and not the so called "revised" portfolio in his interview with Yale Magazine during March/April 2009. Interesting. At the end of the day, I wonder why investors argue over these two portfolio's? There is only a 5% difference between REITs and Emerging Markets. Personally I would rather have the additional Real Estate allocation than Emerging Markets.

Now then, I have wondered many times David Swensen's thoughts and perspective on International REITs. I would imagine he would recommend them but I could be mistaken. I base this on his high allocation to REITs and Real Estate and his large allcoation to International Equities in general.

Unfortunately, "Unconventional Success" was written in 2005 and unlike his other book "Pioneering Portfolio Management", he has not yet updated it. I did try to email him at Yale but did not receive a response. I did see however he was out for a while unfortunately due to cancer treatments but is back now.

Here is his email address from the Yale website:

david.swensen@yale.edu

http://directory.yale.edu/phonebook/vie ... u%3DPeople

You could try to email him and if you are lucky you may get a response. Perhaps he will be fine with you sharing it here on the website. Someone did do this years ago, and he responded, regarding the duration of Treasury securities and noted it was fine to post.

Thanks.


Thanks for this. I emailed David this morning and said this was a hot topic on the forums.

I also provided a link to this thread and requested (with his permission) to post the reply here.


Did David Swensen email you back regarding International REITs?
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + REITs
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Re: REIT question

Postby InvestorNewb » Sat Aug 31, 2013 7:48 pm

abuss368 wrote:Did David Swensen email you back regarding International REITs?


Not yet - unfortunately.

I've decided to keep piling up my stash of domestic REITs until more information/advice is available about international REITs.
Current Holdings: VTI, VXUS, VNQ, VCE (largest to smallest)
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Re: REIT question

Postby Valuethinker » Sun Sep 01, 2013 9:06 am

InvestorNewb wrote:
abuss368 wrote:Did David Swensen email you back regarding International REITs?


Not yet - unfortunately.

I've decided to keep piling up my stash of domestic REITs until more information/advice is available about international REITs.


Since he took leave of absence for cancer you might have a bit of a wait.
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Re: REIT question

Postby InvestorNewb » Sun Sep 01, 2013 9:12 am

Valuethinker wrote:
InvestorNewb wrote:
abuss368 wrote:Did David Swensen email you back regarding International REITs?


Not yet - unfortunately.

I've decided to keep piling up my stash of domestic REITs until more information/advice is available about international REITs.


Since he took leave of absence for cancer you might have a bit of a wait.


TBH I'm not really expecting a reply from him at all. I know the odds of receiving a reply are extremely low.

I did this in the "off chance" that it might happen, knowing full well that it probably won't.
Current Holdings: VTI, VXUS, VNQ, VCE (largest to smallest)
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Re: REIT question

Postby abuss368 » Sun Sep 01, 2013 6:50 pm

I thought hr return from his medical leave. Perhaps I am mistaken.
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