Why no love for REITs?

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tvubpwcisla
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Why no love for REITs?

Post by tvubpwcisla » Sun May 10, 2020 8:01 am

REITs seem like a great way to balance out a portfolio, they pay solid dividends, and have good long term performance. I don't see a lot of investors actively pursuing them. Are REITs a portfolio's best friend, or do they have a bunch of underlying issues an investor should be aware of?

:confused
Stay invested my friends.

lakpr
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Re: Why no love for REITs?

Post by lakpr » Sun May 10, 2020 8:07 am

Highly tax inefficient, for one. Dividends from REITs are taxed as ordinary income.

Total stock market index has the REITs market-weighted already. No reason to overweight

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Re: Why no love for REITs?

Post by retiredjg » Sun May 10, 2020 8:08 am

There is plenty of love for REITs around here. And some people think there is enough included in the total market funds.

stan1
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Re: Why no love for REITs?

Post by stan1 » Sun May 10, 2020 8:14 am

Review the top holdings. REIT structure is used to operate data centers, logistics warehouses, cellular infrastructure, etc. You may be OK with that but it may not be what you expect when you invest in real estate.

invest2bfree
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Re: Why no love for REITs?

Post by invest2bfree » Sun May 10, 2020 8:16 am

It is because when you buy Real Estate you need to be excellent capital allocator and not over pay.

Many Reits are unfortunately managed by incompetent managers with high salaries.

Growth is more important and assets under management are important.

Whenever a Reit under loses 20% when economy is under stress then it is not a good diversifier.

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Re: Why no love for REITs?

Post by trueblueky » Sun May 10, 2020 8:58 am

https://www.bogleheads.org/wiki/Real_es ... ment_trust
Pay particular attention to the section on the composition of distributions --
* non-qualified dividends (taxed as ordinary income)
* capital gains from sale of underlying property (can be short-term or long-term)
* return of capital (decreases the basis of your holding until it reaches zero. After that, this distribution is taxed as ordinary income.)

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Kenkat
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Re: Why no love for REITs?

Post by Kenkat » Sun May 10, 2020 9:15 am

invest2bfree wrote:
Sun May 10, 2020 8:16 am
Many Reits are unfortunately managed by incompetent managers with high salaries.
This describes many non-Reit companies as well.

My dad always said that companies succeed in spite of their best efforts to screw things up. I thought it was a joke until I started working full time in a career.

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Re: Why no love for REITs?

Post by AlohaJoe » Sun May 10, 2020 9:15 am

tvubpwcisla wrote:
Sun May 10, 2020 8:01 am
I don't see a lot of investors actively pursuing them.
That is entirely because REITs have underperformed recently.

From 1997-2006 (i.e. a decade) REITs outperformed the broader market: 14.18% to 8.57%. They also had lower volatility: 13% vs 15%. A lower max drawdown: -22% vs -44%. A higher Sharpe ratio: 0.77 vs 0.38. And a low correlation to the stock market: just 0.33.

Go back to that time period and lots of Bogleheads (well, they were Vanguard Diehards on the Morningstar forums back then) talked about REITs and had them in their portfolios.

Now fast forward to the decade 2010-2019 that we just ended. REITs underperformed: 9.37 vs 11.65%. They had higher volatility: 16% vs 13%. They had a higher max drawdown: -25% vs -20%. They had a lower Sharpe ratio: 0.59 vs 0.80. And they had dramatically higher correlation to the stock market: 0.70.

It is all about recency bias. I assure you, that if we get 3-5 years of REITs outperforming the broader stock market, there will be hundreds of threads again about REITs. Look at how REITs were discussed among Bogleheads in the 2002-2006 years. I don't want to suggest it was widespread agreement that REITs were great but it was substantially more positive than today, with a lot more threads about it.

https://community.morningstar.com/t5/Bo ... m-p/469898
https://community.morningstar.com/t5/Bo ... m-p/105654
https://community.morningstar.com/t5/Bo ... m-p/297252
https://community.morningstar.com/t5/Bo ... m-p/109155
https://community.morningstar.com/t5/Bo ... m-p/470045

While individual Bogleheads may stay the course, discussion trends on the forum come & go based on recent performance.

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Re: Why no love for REITs?

Post by JonnyDVM » Sun May 10, 2020 9:22 am

I think a lot of us have an REIT tilt. They are about the worst possible investment from a tax standpoint so they have to go in tax advantaged. That to me is the biggest drawback. A prevailing opinion is here TSM already has REIT so no need to overweight and I’ve seen a few posters note the current long term forecasts for them are not great. It was fairly common topic of conversation before Corona.
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Re: Why no love for REITs?

Post by bertilak » Sun May 10, 2020 9:38 am

Tilting towards REITs is another word for overweighting them with the emphasis on "over." You don't want to overdo anything unless you have good reasons to believe you will over-benefit from it. No matter what the sector, you can find really good stories (reasons) about that sector explaining why you should overweight it. You can't overweight everything or you have overweighted nothing.
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Re: Why no love for REITs?

Post by retired@50 » Sun May 10, 2020 9:39 am

tvubpwcisla wrote:
Sun May 10, 2020 8:01 am
REITs seem like a great way to balance out a portfolio, they pay solid dividends, and have good long term performance. I don't see a lot of investors actively pursuing them. Are REITs a portfolio's best friend, or do they have a bunch of underlying issues an investor should be aware of?

:confused
Burton G. Malkiel often mentions using REITs or REIT index funds in a portfolio in his books.
One example is "The Random Walk Guide to Investing: Ten Rules for Financial Success".

My advice is to tuck them into your Roth IRA, then all the downside tax consequences just melt away.

Regards,
This is one person's opinion. Nothing more.

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Kenkat
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Re: Why no love for REITs?

Post by Kenkat » Sun May 10, 2020 9:40 am

AlohaJoe wrote:
Sun May 10, 2020 9:15 am
tvubpwcisla wrote:
Sun May 10, 2020 8:01 am
I don't see a lot of investors actively pursuing them.
That is entirely because REITs have underperformed recently.

From 1997-2006 (i.e. a decade) REITs outperformed the broader market: 14.18% to 8.57%. They also had lower volatility: 13% vs 15%. A lower max drawdown: -22% vs -44%. A higher Sharpe ratio: 0.77 vs 0.38. And a low correlation to the stock market: just 0.33.

Go back to that time period and lots of Bogleheads (well, they were Vanguard Diehards on the Morningstar forums back then) talked about REITs and had them in their portfolios.

Now fast forward to the decade 2010-2019 that we just ended. REITs underperformed: 9.37 vs 11.65%. They had higher volatility: 16% vs 13%. They had a higher max drawdown: -25% vs -20%. They had a lower Sharpe ratio: 0.59 vs 0.80. And they had dramatically higher correlation to the stock market: 0.70.

It is all about recency bias. I assure you, that if we get 3-5 years of REITs outperforming the broader stock market, there will be hundreds of threads again about REITs. Look at how REITs were discussed among Bogleheads in the 2002-2006 years. I don't want to suggest it was widespread agreement that REITs were great but it was substantially more positive than today, with a lot more threads about it.

https://community.morningstar.com/t5/Bo ... m-p/469898
https://community.morningstar.com/t5/Bo ... m-p/105654
https://community.morningstar.com/t5/Bo ... m-p/297252
https://community.morningstar.com/t5/Bo ... m-p/109155
https://community.morningstar.com/t5/Bo ... m-p/470045

While individual Bogleheads may stay the course, discussion trends on the forum come & go based on recent performance.
How dare you! Please use the officially sanctioned terms of “reassessing risk tolerance” and “desire to simplify” when discussing such matters. “Recency bias” is so gauche.

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Re: Why no love for REITs?

Post by magneto » Sun May 10, 2020 10:45 am

Post CV tenant demand seems likely to decline, as may the navs and yields.
As part of a balanced portfolio we grin and bear it.
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Re: Why no love for REITs?

Post by grok87 » Sun May 10, 2020 12:55 pm

lakpr wrote:
Sun May 10, 2020 8:07 am
Highly tax inefficient, for one. Dividends from REITs are taxed as ordinary income.

Total stock market index has the REITs market-weighted already. No reason to overweight
this used to be true but under the new tax law REIT dividends get a bit of a tax break.

also the headline yield of reits has return of capital and long term capital gains as part of it. those are arguably more favorably taxed in a taxable account than they ultimately would be in an ordinary IRA.
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Re: Why no love for REITs?

Post by CyclingDuo » Sun May 10, 2020 1:08 pm

tvubpwcisla wrote:
Sun May 10, 2020 8:01 am
REITs seem like a great way to balance out a portfolio, they pay solid dividends, and have good long term performance. I don't see a lot of investors actively pursuing them. Are REITs a portfolio's best friend, or do they have a bunch of underlying issues an investor should be aware of?

:confused
VNQ is part of a lot of standard portfolios...

https://www.bogleheads.org/blog/2020/01 ... 19-update/

Also a part of a lot of Lazy Portolios (at least 17 of them)...

https://www.whitecoatinvestor.com/150-p ... han-yours/
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Why no love for REITs?

Post by LilyFleur » Sun May 10, 2020 4:59 pm

My home is now 34% of my net worth (with the recent drop in equities). My portfolio is already weighted too heavily in real estate, so I would not invest in REITs. I live in a modest condo in a HCOL area, and it is not possible to downsize.

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Re: Why no love for REITs?

Post by LilyFleur » Sun May 10, 2020 5:01 pm

My home is now 34% of my net worth (with the recent drop in equities). My portfolio is already weighted too heavily in real estate, so I would not invest in REITs. I live in a modest condo in a HCOL area, and it is not possible to downsize.

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Re: Why no love for REITs?

Post by bling » Sun May 10, 2020 6:04 pm

for those with > 10% allocation towards REITs, has recent events changed your perspective or not? whether you're staying the course or not, why/why not?

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Re: Why no love for REITs?

Post by abuss368 » Sun May 10, 2020 6:04 pm

lakpr wrote:
Sun May 10, 2020 8:07 am
Highly tax inefficient, for one. Dividends from REITs are taxed as ordinary income.

Total stock market index has the REITs market-weighted already. No reason to overweight
Not as tax inefficient as before since Trump tax act of 2017. REITS now eligible for QBI deduction.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by bikechuck » Sun May 10, 2020 6:32 pm

Many if not most REITS are invested in commercial real estate. I think that commercial real estate is going to be devastated in the coming months so I have no interest in owning more that what I have in my total market index fund.

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Re: Why no love for REITs?

Post by unclescrooge » Sun May 10, 2020 6:40 pm

lakpr wrote:
Sun May 10, 2020 8:07 am
Highly tax inefficient, for one. Dividends from REITs are taxed as ordinary income.

Total stock market index has the REITs market-weighted already. No reason to overweight
That's no longer true. First 20% are tax free.

Also, real estate is under represented in public securities.

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Re: Why no love for REITs?

Post by abuss368 » Sun May 10, 2020 8:21 pm

One point I noted is the US REIT fund is completely different than the International RE/REIT fund (and I invested in it for a long time). REITS are not the same overseas. Many countries still don’t have this legal and tax structure and if they do there are still a lot of differences. In addition, most international real estate are simply real estate companies (REOC) which is completely different. Looking at past performance (got it could be different in future but probably not as legal and tax structure differences) is so underperforming compared to US REIT market.

Not the same as common stocks.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by rgs92 » Sun May 10, 2020 8:26 pm

I feel owning a large amount of REIT investments is basically a concentration in one sector of the market, which is not a good thing to do.

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Re: Why no love for REITs?

Post by JonnyDVM » Sun May 10, 2020 9:03 pm

bling wrote:
Sun May 10, 2020 6:04 pm
for those with > 10% allocation towards REITs, has recent events changed your perspective or not? whether you're staying the course or not, why/why not?
No. Why would I change a long term strategy based on recent events? I even bought more last month. *audible gasp*. I think I’m the only guy on this board who is avoiding buying the S&P 500 right now. I’m trying to scoop up the parts of the market where the value got hit the hardest. I’m looking 20 years out. Not two.
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Re: Why no love for REITs?

Post by OverheatedEconomy » Sun May 10, 2020 9:22 pm

Correct me if I'm wrong but they seem pretty decent for tax advantaged plans like IRAs and 401ks since you're essentially bypassing a large part of the tax issue while still able to take advantage of all the benefits of the 401k.

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Re: Why no love for REITs?

Post by dru808 » Sun May 10, 2020 9:30 pm

I don’t because the majority of our net-worth is tied to our house. It’s enough real estate exposure at this point in our lives.


I have no issue with reits, I think they can be a positive addition to a well diversified portfolio.
60% US equity | 25% International equity | 15% US Treasury bonds

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Re: Why no love for REITs?

Post by venkman » Sun May 10, 2020 9:39 pm

REIT's used to be popular because it was thought they were a distinct asset class and had low correlation to the broad stock market. And they did great during the 2000-2002 bear market when growth stocks were getting killed.

Since then, it's been determined that REIT returns can be explained by other factors (small value stocks and long term corporate bonds), and value stocks in general have had a long run of underperformance. And if you want a sector with low correlation to the broad market, utilities have been a better choice.

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Re: Why no love for REITs?

Post by AerialWombat » Sun May 10, 2020 9:58 pm

.....
Last edited by AerialWombat on Sun May 17, 2020 2:52 pm, edited 1 time in total.

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Re: Why no love for REITs?

Post by fatFIRE » Sun May 10, 2020 10:49 pm

I have like 8% REITs. I find that REITs are too correlated with total market. All that research over REITs being a diversifier seems to be not holding up... I'll still keep it regardless.

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Re: Why no love for REITs?

Post by DanFrancis » Sun May 10, 2020 11:12 pm

I bought a REIT index when I did not think it was included in the Total Stock Market Index. I know it is now and still not clear when it was added. It went from 6% of my portfolio to 3% when it became clear REITs were part of the Total Index. Took some profits. I'll eventually simplify further and go to 0%.

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Re: Why no love for REITs?

Post by Watty » Sun May 10, 2020 11:42 pm

Why no love for REITs?
A couple of things to consider.

1) The non-REIT companies that are in your index funds already own a lot of real estate. Some troubled companies are worth more for their real estate than for their business.

2) Many people also own a home either with our without a mortgage. Many people with a large mortgage will have more than 100% of their net worth in real estate

Combined it would be easy to argue that most people already have too much exposure to real estate so there is no need for them to buy a REIT.
invest2bfree wrote:
Sun May 10, 2020 8:16 am
Many Reits are unfortunately managed by incompetent managers with high salaries.
I suspect that most of the REIT management is not really incompetent it is just that there is a risk that have a conflict of interest where they have different goals than the shareholders. An analogy is that Edward Jones is often mentioned here as being a bad place to invest because their fees are too high. Most likely the management of Edward Jones is very competent, it is just that they are competent at making money for themselves.

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Re: Why no love for REITs?

Post by abuss368 » Mon May 11, 2020 6:36 pm

Burton Malkiel is recommending an increased allocation to REITs for retirees. I believe the inflation hedge and cash flow stream from dividends helps.
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Re: Why no love for REITs?

Post by rockstar » Mon May 11, 2020 7:07 pm

bling wrote:
Sun May 10, 2020 6:04 pm
for those with > 10% allocation towards REITs, has recent events changed your perspective or not? whether you're staying the course or not, why/why not?
I have roughly 12% of my portfolio in REITs split between domestic (USRT) and international (REET). Right now, I'm staying the course. I'll revisit next year.

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Re: Why no love for REITs?

Post by abuss368 » Mon May 11, 2020 7:35 pm

rockstar wrote:
Mon May 11, 2020 7:07 pm
bling wrote:
Sun May 10, 2020 6:04 pm
for those with > 10% allocation towards REITs, has recent events changed your perspective or not? whether you're staying the course or not, why/why not?
I have roughly 12% of my portfolio in REITs split between domestic (USRT) and international (REET). Right now, I'm staying the course. I'll revisit next year.
Be careful. Most international markets do not have our REIT legal, tax, and accounting structure. They are mostly real estate and REOC companies.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by zonto » Tue May 12, 2020 7:40 am

I have also maintained an allocation to REITs over the years. Used to be 10% of equities (7% of portfolio in each of VNQ (or similar Fidelity options) and VNQI. I upped this at the end of April to 10% of portfolio in each.

A few of my favorite resources on REITs: One response to the below:
abuss368 wrote:
Mon May 11, 2020 7:35 pm
rockstar wrote:
Mon May 11, 2020 7:07 pm
bling wrote:
Sun May 10, 2020 6:04 pm
for those with > 10% allocation towards REITs, has recent events changed your perspective or not? whether you're staying the course or not, why/why not?
I have roughly 12% of my portfolio in REITs split between domestic (USRT) and international (REET). Right now, I'm staying the course. I'll revisit next year.
Be careful. Most international markets do not have our REIT legal, tax, and accounting structure. They are mostly real estate and REOC companies.
REET is an exception because it only holds REITs, even internationally. In my opinion the allocation doesn’t make sense because REET is about 2/3 invested in what USRT already holds (U.S. REITs).
"For real-world portfolios, the main impact of diversification is to narrow the dispersion of outcomes. [T]he most important impact is to make the worst outcomes less bad." (Vineviz)

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 7:44 am

zonto wrote:
Tue May 12, 2020 7:40 am

REET is an exception because it only holds REITs, even internationally. In my opinion the allocation doesn’t make sense because REET is about 2/3 invested in what USRT already holds (U.S. REITs).
Interesting. So it has a lot of overlap. One option would be to simplify to just US REITs.
Last edited by abuss368 on Tue May 12, 2020 7:58 am, edited 1 time in total.
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Re: Why no love for REITs?

Post by zonto » Tue May 12, 2020 7:50 am

abuss368 wrote:
Tue May 12, 2020 7:44 am
zonto wrote:
Tue May 12, 2020 7:40 am

REET is an exception because it only holds REITs, even internationally. In my opinion the allocation doesn’t make sense because REET is about 2/3 invested in what USRT already holds (U.S. REITs).
Interesting. So it has a lot of overlap. One option would be to simplify to just REET which is all US I believe.
I agree with the consolidation. REET is 66% US / 34% international. (source)
"For real-world portfolios, the main impact of diversification is to narrow the dispersion of outcomes. [T]he most important impact is to make the worst outcomes less bad." (Vineviz)

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 8:01 am

zonto wrote:
Tue May 12, 2020 7:50 am
abuss368 wrote:
Tue May 12, 2020 7:44 am
zonto wrote:
Tue May 12, 2020 7:40 am

REET is an exception because it only holds REITs, even internationally. In my opinion the allocation doesn’t make sense because REET is about 2/3 invested in what USRT already holds (U.S. REITs).
Interesting. So it has a lot of overlap. One option would be to simplify to just REET which is all US I believe.
I agree with the consolidation. REET is 66% US / 34% international. (source)
Thanks. I edited my post.
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Re: Why no love for REITs?

Post by apple44 » Tue May 12, 2020 8:47 am

REITs are currently being hit very hard, especially the hotel REITS like Ashford entities, which are in headlines recently for receiving at least $60 million PPP loans, and then facing tremendous public and political pressure, refused to return it, and then facing potential civil and criminal penalties, decided to return it. Mortgage REITs are also at a historic low. I think it may be a good time to dive in.

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 9:01 am

apple44 wrote:
Tue May 12, 2020 8:47 am
REITs are currently being hit very hard, especially the hotel REITS like Ashford entities, which are in headlines recently for receiving at least $60 million PPP loans, and then facing tremendous public and political pressure, refused to return it, and then facing potential civil and criminal penalties, decided to return it. Mortgage REITs are also at a historic low. I think it may be a good time to dive in.
I invested in individual equity and mortgage REITs many years back. I soon learned that mortgage REITs were a whole different ballgame. Their high yield was certainly high risk" Impact Mortgage, Annaly, Anworth, MFA, American Home Mortgage, and I could easily keep going.

The Vanguard REIT Index fund is equity only REITs in the US.

The Vanguard ex-US Global Real Estate fund is not so much a REIT fund. Most of the world has real estate companies, REOC, and some REITs but the REITs are not always the same legal, taxable, and accounting structure as the US. This is a key difference and I believe it is not apples to apples.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by apple44 » Tue May 12, 2020 10:56 am

abuss368 wrote:
Tue May 12, 2020 9:01 am
apple44 wrote:
Tue May 12, 2020 8:47 am
REITs are currently being hit very hard, especially the hotel REITS like Ashford entities, which are in headlines recently for receiving at least $60 million PPP loans, and then facing tremendous public and political pressure, refused to return it, and then facing potential civil and criminal penalties, decided to return it. Mortgage REITs are also at a historic low. I think it may be a good time to dive in.
I invested in individual equity and mortgage REITs many years back. I soon learned that mortgage REITs were a whole different ballgame. Their high yield was certainly high risk" Impact Mortgage, Annaly, Anworth, MFA, American Home Mortgage, and I could easily keep going.
Yes indeed! The "high risk" part is that you really can't judge them by the traditional method, because something totally unrelated, like the virus, could cause their values to drop instantly. There were a few REITs that were on the edge of bankruptcy at the end of March. Everyday I woke up to news worse and worse and then government stepped in and they got some breathing room.

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Re: Why no love for REITs?

Post by willthrill81 » Tue May 12, 2020 10:59 am

lakpr wrote:
Sun May 10, 2020 8:07 am
Highly tax inefficient, for one.
They aren't as tax inefficient as bonds. Examining Vanguard's performance tabs of their funds demonstrates this. The differences between pre-tax and post-tax returns (at the highest marginal federal tax bracket) are definitely greater for REITs than stock index funds but not nearly as much as that of bonds.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 11:07 am

lakpr wrote:
Sun May 10, 2020 8:07 am
Highly tax inefficient, for one. Dividends from REITs are taxed as ordinary income.

Total stock market index has the REITs market-weighted already. No reason to overweight
This changed with tax act in 2017 with QBI deduction. REITs can provide a lot of dividends to retirees!
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by ronno2018 » Tue May 12, 2020 12:00 pm

Well my VNQ is doing terrible today -- down 3.62%. I think it will continue to drop until a vaccine is around. Yikes.

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 1:47 pm

ronno2018 wrote:
Tue May 12, 2020 12:00 pm
Well my VNQ is doing terrible today -- down 3.62%. I think it will continue to drop until a vaccine is around. Yikes.
CNBC was talking about this today. Retail and Office impacting and getting best of apartment, warehouse, data centers, cell towers, industrial, land, etc.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by bling » Tue May 12, 2020 7:39 pm

ronno2018 wrote:
Tue May 12, 2020 12:00 pm
Well my VNQ is doing terrible today -- down 3.62%. I think it will continue to drop until a vaccine is around. Yikes.
ouch, closed -4.55%... then again, small caps got crushed across the board as well.

IJR -3.71% (ishares small cap)
IJS -3.77% (ishares small cap value)
VB -3.27% (vanguard small cap)
VBR -4.03% (vanguard small cap value)

sigh...wish i had a crystal ball and put my entire bond allocation in LTT.

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Re: Why no love for REITs?

Post by rockstar » Tue May 12, 2020 7:52 pm

ronno2018 wrote:
Tue May 12, 2020 12:00 pm
Well my VNQ is doing terrible today -- down 3.62%. I think it will continue to drop until a vaccine is around. Yikes.
REITs are really painful right now. You'd think people would never leave their homes.

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Re: Why no love for REITs?

Post by abuss368 » Tue May 12, 2020 8:42 pm

rockstar wrote:
Tue May 12, 2020 7:52 pm
ronno2018 wrote:
Tue May 12, 2020 12:00 pm
Well my VNQ is doing terrible today -- down 3.62%. I think it will continue to drop until a vaccine is around. Yikes.
REITs are really painful right now. You'd think people would never leave their homes.
There are so many real estate categories beyond residential such as apartments, cell towers, industrial, storage, data centers, lifestyle, retail, office, and raw land.

Many of these subcategories are doing well or prospering.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Why no love for REITs?

Post by Triple digit golfer » Tue May 12, 2020 9:09 pm

I love REITs at market cap weighing, the same amount that I love energy, consumer staples, technology, financials, etc.

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Re: Why no love for REITs?

Post by PurpleArc » Wed May 13, 2020 8:04 am

CyclingDuo wrote:
Sun May 10, 2020 1:08 pm
tvubpwcisla wrote:
Sun May 10, 2020 8:01 am
REITs seem like a great way to balance out a portfolio, they pay solid dividends, and have good long term performance. I don't see a lot of investors actively pursuing them. Are REITs a portfolio's best friend, or do they have a bunch of underlying issues an investor should be aware of?

:confused
VNQ is part of a lot of standard portfolios...

https://www.bogleheads.org/blog/2020/01 ... 19-update/

Also a part of a lot of Lazy Portolios (at least 17 of them)...

https://www.whitecoatinvestor.com/150-p ... han-yours/
It is probably recency bias, REITs have underperformed in 2008 and in covid-19 (maybe because both crisis are property related). VNQ has a larger drawdown so far despite tilted to data centers and telecommunication towers, which are suppose to be areas that is not harmed by the pandemic.

S-REITs market, Asia's largest REITs market in Asia, also suffered more than Singapore equities.

I am in VNQ and continues to hold.

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