Global vs US REITs

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Always passive
Posts: 408
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

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

User avatar
Tyler9000
Posts: 429
Joined: Fri Aug 21, 2015 11:57 am

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.

AlohaJoe
Posts: 4713
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

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.

Angst
Posts: 2045
Joined: Sat Jun 09, 2007 11:31 am

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

Quaestner
Posts: 177
Joined: Tue Jul 18, 2017 6:39 pm

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.

Post Reply