stan1 wrote: ↑
Fri Aug 18, 2017 7:59 am
The REIT proposal is very important as it fundamentally changes the REIT Index Fund from REITs to Real Estate: Vanguard is proposing to add real estate development and management companies to this fund. I voted no.
It would be interesting to see what the impact is:
The MSCI US REIT Index includes only equity REITs. The MSCI US Investable Market Real Estate 25/50 Index has approximately 97% of its component securities as equity REITs, which includes an increase in the allocation to specialized REITs, and currently a 3% allocation to real estate management and development companies. If shareholders approve the investment objective change for the Funds, then the corresponding change to each Fund’s benchmark index will provide investors of each Fund with exposure to the securities of approximately 26 additional real estate issuers.
The fact sheet on the index is here: https://www.msci.com/documents/10199/a3 ... 570d1c7137
The changes to the top 10 holdings, relative to the current stated holdings of Vanguard REIT, are including:
- American Tower Corp, which owns broadcast and wireless comm towers
- Crown Castle, which also owns broadcast and wireless comm towers
- Weyerhauser, which owns timberland
You could make arguments both ways. Owning specialized REITs seems to add quite a bit of diversification to the fund. I'm certain Jeremy Grantham will be excited about the timberland
I don't have a dog in this fight but I would vote yes, diversification is the only free lunch as they say.