Thoughts on Global ex-U.S. Real Estate

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Thoughts on Global ex-U.S. Real Estate

Post by tc101 » Thu Feb 09, 2012 9:27 pm

What are your thoughts on Vanguard Global ex-U.S. Real Estate ? Expenses on the ETF are only .35%. Is this an important and useful diversifier, or is it unnecessary?
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Re: Thoughts on Global ex-U.S. Real Estate

Post by Liquid » Thu Feb 09, 2012 9:36 pm

I wish the 90% passthrough for US REITs applied to foreign real estate. Nevertheless, it represents a large chunk of the investment universe and as such is probably attractive to those who seek a total market approach.

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Re: Thoughts on Global ex-U.S. Real Estate

Post by dharrythomas » Thu Feb 09, 2012 10:16 pm

I've got it. About the same sized holding as my US REIT. It should be a diversifier, whether it helps returns I'll only know in hindsight.

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Re: Thoughts on Global ex-U.S. Real Estate

Post by abuss368 » Thu Feb 09, 2012 10:27 pm

I am very interested in this fund and have been watching it.

While the fund s only $270 million dollars after a year plus in existence, I think there are a few things Vanguard could consider to attract more assets into the fund:

1) The name of the fund just stinks. How about "Total International Real Estate Index Fund" for starters?

2) Remove the purchase and redemption fees.

3) The annual dividend has to change. For a Real Estate fund, it has to go to a quarterly or at least twice a year payout. Most folks invest in real estate/reits for the payouts.

I would think these changes would make the fund much more marketable resulting in additional inflow of assets and corresponding decrease in fees.
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Re: Thoughts on Global ex-U.S. Real Estate

Post by Boglenaut » Thu Feb 09, 2012 10:29 pm

I noticed its main holdings are also held by Vanguard Total International (VTIAX/VXUS/etc).

To what extent would owning a small amount be filling an underweighted gap in VXUS, vs. overweighting a sector?

In other words, is real estate in Tot Intl. not fully represented? Or is it fully weighted and adding this fund an overweight position?

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Re: Thoughts on Global ex-U.S. Real Estate

Post by actor10 » Thu Feb 09, 2012 10:46 pm

I bought VNQI at the beginning of January as part of a massive switch away from individual domestic stocks.
I'm not allowed to complain about the performance -- lucky timing.

It's 5% of the AA. (Along with 5% in VNQ.)

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Re: Thoughts on Global ex-U.S. Real Estate

Post by kramer » Thu Feb 09, 2012 11:00 pm

I was wondering what percentage of this Vanguard fund is true foreign REITs? Those which would (more or less) qualify as REITs in the USA and have similar dividend pass-through laws. . . some countries have developed REIT structures similar to the USA but not that many . . .

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Re: Thoughts on Global ex-U.S. Real Estate

Post by Karamatsu » Fri Feb 10, 2012 2:14 am

I'm not sure about other countries, but Japanese REITS (at 18% the largest component of VNQI) do seem to follow the outline of the US model and pay out 90% of taxable income. Of course, this is a bit of a sham since taxable income can always be reduced by expenses like bonuses and other forms of compensation, but at least it provides some measure of access to real estate, and they were pretty popular for a while. I'm not sure how they fared as investor sentiment cooled. There was some consolidation in the sector and share prices are pretty volatile, if high. $1000-$5000/share isn't unusual, so given 30-40 J-REITS to choose from, a fund is a much better approach than a few highly concentrated bets.

As far as Vanguard fees go there is, of course, the ETF. More frequent dividends would indeed be nice but we might have to pay higher fees to get them. Not sure...

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