Global vs US REITs

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Always passive
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Global vs US REITs

Post by Always passive » Mon May 13, 2019 12:18 am

What is the consensus of the group? As a diversifier, use Global or US based REITs. I checked the correlation of the monthly returns since 2008 (no longer data for RWO) between RWO (global) and RWR (US) and it is over 0.9, so I do not see much difference in their behavior. Is there any other consideration fort going global?
Thank you for your help

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Re: Global vs US REITs

Post by Tyler9000 » Mon May 13, 2019 12:47 am

It's important to remember that "global" is not the same as "foreign". Look at the holdings by country in RWO (or any similar global REIT fund), and they're about 60% US. I imagine there are very reasonable risk management arguments for diversifying companies as broadly as possible with a global REIT fund, but practically speaking I would expect US and global REIT funds to have reasonably similar performance. Personally, I'd prioritize the much lower expense ratio of a fund like VNQ over the greater company count in RWO.

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Re: Global vs US REITs

Post by AlohaJoe » Mon May 13, 2019 1:26 am

iShares REET has an ER of 0.14. It seems like a much better choice for global REITs.

Is there any reason to go US-only?

In any case, just looking at correlations alone can sometimes be misleading, since the correlation doesn't tell you much about the magnitude.

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Re: Global vs US REITs

Post by Angst » Fri May 17, 2019 4:20 am

I can't say what the consensus is (I doubt there is one) but I prefer to roll my own "global RE/REIT" at roughly 50% US, 50% ex-US: I use Vanguard's VNQ and VNQI

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Re: Global vs US REITs

Post by Quaestner » Fri May 17, 2019 4:55 pm

I'm not counting on correlations to be predictable, but I choose to put put 8-10% of our equity allocation in Reits. Like Angst, I use VNQ and VNQI (60%/40%). You won't get a consensus here, but that's what I do, FWIW.

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