Does VTI already include REIT
Does VTI already include REIT
Just curious, does VTI already include REIT? If so, what percentage?
Re: Does VTI already include REIT
Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
Don't assume I know what I'm talking about.
Re: Does VTI already include REIT
The argument for adding more REIT is that most real estate investments are not traded on the stock exchanges therefore the amount in a total stock market funds is very much underweighted in RE.vchiu25 wrote:Just curious, does VTI already include REIT? If so, what percentage?
There is also something to be gained in holding it separately because of low correlation with the rest stock market.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
- Taylor Larimore
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Stock market real estate?
vchiu25:
In addition to the 3.59% in real estate stocks owned by Total Stock Market, it should be noted that most corporations have real-estate holdings not included in the 3.59% figure.
Best wishes.
Taylor
In addition to the 3.59% in real estate stocks owned by Total Stock Market, it should be noted that most corporations have real-estate holdings not included in the 3.59% figure.
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Does VTI already include REIT
Thanks G-Money, I was unaware of this website feature.G-Money wrote:Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
These %'s appear to be pretty different than what I remember seeing in the wiki, although I don't have the link in front of me.
EDIT: Link added below
http://www.bogleheads.org/wiki/Percenta ... ndex_Funds
Re: Does VTI already include REIT
A lot can change in 4 years. For instance, Vanguard has changed its benchmarks for several of its funds. And the percentages vary over time anyway.Valdeselad wrote:Thanks G-Money, I was unaware of this website feature.G-Money wrote:Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
These %'s appear to be pretty different than what I remember seeing in the wiki, although I don't have the link in front of me.
EDIT: Link added below
http://www.bogleheads.org/wiki/Percenta ... ndex_Funds
Don't assume I know what I'm talking about.
Re: Does VTI already include REIT
A lot certainly has changed. Another *huge* change, possibly related to the changing percentages of REITs held in the various index funds, is that the REIT market as a whole has shifted from predominantly small- to mid-cap value companies in 2009 to predominantly large-cap blend and *growth*.G-Money wrote:A lot can change in 4 years. For instance, Vanguard has changed its benchmarks for several of its funds. And the percentages vary over time anyway.Valdeselad wrote:Thanks G-Money, I was unaware of this website feature.G-Money wrote:Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
These %'s appear to be pretty different than what I remember seeing in the wiki, although I don't have the link in front of me.
EDIT: Link added below
http://www.bogleheads.org/wiki/Percenta ... ndex_Funds
That's a change I never saw coming...
--Pete
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
Re: Does VTI already include REIT
Of course, the same holds true for any other small slice of the market you might want to choose, say Materials, Utilities, or Telecom companies. REITs are really only distinctive because of their tax structure, which for the end investor makes no difference is a tax-advantaged account and is a disadvantage in a taxable account. I guess I've never understood the endless fascination with REITs on this board.There is also something to be gained in holding it separately because of low correlation with the rest stock market.
- Taylor Larimore
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- Joined: Tue Feb 27, 2007 7:09 pm
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"Slicing" and low-correlation.
Total Stock Market Funds hold every small slice of the market and investors benefit from the same "low correlation" whether held separately or not. The benefit, if any, comes from over-weighting category "slices."stlutz wrote:Of course, the same holds true for any other small slice of the market you might want to chooseThere is also something to be gained in holding it separately because of low correlation with the rest stock market.
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Re: Does VTI already include REIT
Just a guess, but my impression is this has less to do with index fund construction and more to do with REITs getting bid up in price as lots of investors search for higher yields.petrico wrote:A lot certainly has changed. Another *huge* change, possibly related to the changing percentages of REITs held in the various index funds, is that the REIT market as a whole has shifted from predominantly small- to mid-cap value companies in 2009 to predominantly large-cap blend and *growth*.G-Money wrote:A lot can change in 4 years. For instance, Vanguard has changed its benchmarks for several of its funds. And the percentages vary over time anyway.Valdeselad wrote:Thanks G-Money, I was unaware of this website feature.G-Money wrote:Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
These %'s appear to be pretty different than what I remember seeing in the wiki, although I don't have the link in front of me.
EDIT: Link added below
http://www.bogleheads.org/wiki/Percenta ... ndex_Funds
That's a change I never saw coming...
--Pete
I have a minuscule allocation to REITs, and have been wondering for a while whether it's even worth the bother. Now that they are apparently richly valued, this might be as good a time as any to dump them. But I only allow myself to make trades after getting my quarterly statements, so I guess I won't be doing this before October.
Don't assume I know what I'm talking about.
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Re: Does VTI already include REIT
As a followup, since Total Stock Market is about 3.5% REITs, how is it that Total Stock Market consistently have 100% qualified dividends? With REITs having much higher dividend yields than other stocks, I would only expect a qdi of maybe 95% (that's not even counting bdc's/etc.) Are there some accounting quirks around this (maybe some "deminimus" rules)?
Not that I'm complaining, mind you
Not that I'm complaining, mind you
- Rick Ferri
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Re: Does VTI already include REIT
There are different classifications of REITS; mortgage, equity and hybrid (very few). The percentage of equity REITs within the total stock market is approximitly 3.0%. Their market value was $544 billion as of the end of 2012 according to NAREIT.
Rick Ferri
Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
- InvestorNewb
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Re: Does VTI already include REIT
Historically US REITs have outperformed the Total Stock Market Index. This is one of the reasons I hold them.
Another reason I hold them is to take advantage of the available space in my tax-deferred account. REITs are one of the most inefficient investments to hold from a tax perspective; it's nice reaping the benefits of my tax-deferred account for an investment that would otherwise lose so much to taxes.
Another reason I hold them is to take advantage of the available space in my tax-deferred account. REITs are one of the most inefficient investments to hold from a tax perspective; it's nice reaping the benefits of my tax-deferred account for an investment that would otherwise lose so much to taxes.
Last edited by InvestorNewb on Mon Aug 19, 2013 11:06 am, edited 1 time in total.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
Re: Stock market real estate?
If one added the corporate real estate holdings to the real estate stocks, what would the percentage be?Taylor Larimore wrote:vchiu25:
In addition to the 3.59% in real estate stocks owned by Total Stock Market, it should be noted that most corporations have real-estate holdings not included in the 3.59% figure.
Best wishes.
Taylor
Re: Does VTI already include REIT
Lots of other businesses are also privately held and not listed.Doc wrote:The argument for adding more REIT is that most real estate investments are not traded on the stock exchanges therefore the amount in a total stock market funds is very much underweighted in RE.vchiu25 wrote:Just curious, does VTI already include REIT? If so, what percentage?
There is also something to be gained in holding it separately because of low correlation with the rest stock market.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
Re: Does VTI already include REIT
I think the amount of RE held in partnerships and trusts etc. are a very significant factor. I recall a number of 20 to 30% of TSM but I don't know where I got that from and a quick Google didn't help. In any case I think it is a much larger sector of the economy than the "lots of other" privately held businesses. In any case those privately held businesses probably have similar risk/reward profiles that listed businesses do. This is not true to real estate as others have implied.momar wrote:Lots of other businesses are also privately held and not listed.Doc wrote:The argument for adding more REIT is that most real estate investments are not traded on the stock exchanges therefore the amount in a total stock market funds is very much underweighted in RE.vchiu25 wrote:Just curious, does VTI already include REIT? If so, what percentage?
There is also something to be gained in holding it separately because of low correlation with the rest stock market.
We hold some 7% REITs in addition to what is included in TSM but that number is down from the past as I reduce riskier components of our portfolio with age.
In any case I am not a REIT advocate. I was just pointing out what some of the arguments for holding additional REITS above those in TSM might be.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Does VTI already include REIT
This is very helpful! I never noticed that the "Equity Sector Diversification" shown on the main page for Vanguard funds was different than the "Equity Sector Diversification" shown on the comparison.G-Money wrote:Yes, it does. If you click "Compare" on the Vanguard page for any fund, then scroll down towards the bottom, you'll see "Equity sector diversification." It lists "Real Estate" as 3.59%. The REIT fund (VNQ) has 98.67%. Small-cap value (VBR) has 17.41%, Total International (VXUS) has 4.02%, and FTSE ex-US Small Cap (VSS) has 9.23%.
The comparison page has a note that says "Sector categories are based on the Industry Classification Benchmark system". Perhaps this explains the difference?
In any case, I had no idea that VTI had 3.59% real estate in it and I've owned VTI since December of 2007. Thanks for the schooling G-Money!
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