Altruist Financial Advisors LLC
Fee-Only Investment Management

Foreign Real Estate

 

Home
About Altruist
Our Code of Ethics
How We Save You $
Our Services & Fees
Fee Comparison
Investing Strategies
Investments
DFA vs. Vanguard
Nationwide Service
Our Guarantee
Reading Room
Contact Information
Search
Site Map

REITs are attractive as diversifiers: they tend to have stock-like returns and risk, but are relatively uncorrelated with other asset classes.  For more information about REITs, see here.

Foreign REITs offer additional diversification benefit.

There are several very similar investment options available.  Which is best?

The funds are listed in rough order of our overall preference.

Preferences are listed separately for use in retirement accounts and for taxable accounts.

For a listing of our preferences in other asset classes, see here.

Retirement Accounts (i.e., tax-deferred or tax-exempt accounts)

bulletVanguard Global ex-U.S. Real Estate Fund Admiral Shares (VGRLX).  E/R 0.18%.  This fund tracks the S&P Global ex-U.S. Property Index of international real estate stocks in both developed and emerging markets.

bulletDFA International Real Estate Securities Portfolio (DFITX).  E/R 0.31%.  This fund "Invest[s] in a broad portfolio of securities of non-U.S. companies in the real estate industry, including developed and emerging markets, with a focus on non-U.S. real estate investment trusts (REITs) or companies that the Advisor considers REIT-like entities."  The fund is passively managed and weights its holdings roughly in proportion to each security's market capitalization.  Country weights are generally "based on the total market capitalization of eligible companies within each country."

bulletVanguard Global ex-U.S. Real Estate ETF (VNQI).  E/R 0.18%.  This fund tracks the S&P Global ex-U.S. Property Index of international real estate stocks in both developed and emerging markets.

bulletiShares S&P World ex-U.S. Property Index Fund (WPS).  E/R: 0.48%.  This ETF tracks the S&P/Citigroup BMI World ex-U.S. Property Index.  This is an index of REIT-like companies in developed markets outside the United States.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletiShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund (IFGL).  E/R: 0.48%.  This ETF tracks the FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index of companies engaged in the ownership, disposure, and development of the Canadian, European, and Asian real estate markets.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.
 
bulletWisdomTree International Real Estate Fund (DRW).  E/R: 0.58%.  This ETF tracks the WisdomTree International Real Estate Index.  This is a dividend-weighted index of REIT-like companies in developed markets outside North America.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletSPDR DJ Wilshire International Real Estate ETF (RWX).  E/R: 0.60%.  This ETF tracks the Dow Jones Wilshire Ex-US Real Estate Securities Index, an equity index based upon the global (ex-US) real estate market.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletFirst Trust FTSE EPRA/NAREIT Global Real Estate Index Fund (FFR).  E/R: 0.60%.  This fund tracks the FTSE EPRA/NAREIT Global Real Estate Index of real estate companies and REITS engaged in specific aspects of the North American, European, and Asian real estate markets.  The fact that this fund is about 61% foreign companies should diversify an otherwise all-US portfolio.

bulletNorthern Global Real Estate Index Fund (NGREX).  E/R: 0.65% (actually, the expense ratio is 0.75% it is temporarily reduced to 0.65%, but that could change at any time without notice).  This fund tracks the FTSE EPRA/NAREIT Global Real Estate Index of real estate companies and REITS engaged in specific aspects of the North American, European, and Asian real estate markets.  The fact that this fund is about 75% foreign companies should diversify an otherwise all-US portfolio.  This fund has a redemption fee of 2% on shares sold within 30 days of purchasing.  With its relatively high expense ratio, we see little reason to use it instead of the above alternatives.

Taxable Accounts

U.S. REITs generally should not be held in taxable accounts.  However, this issue is a bit more complex for foreign holdings.  If held in a taxable account, you can recover the foreign tax withholding via the foreign tax credit.  But that would also subject the fund's dividends to relatively high income tax rates.  You can defer the income tax by putting it in a retirement account, but then you permanently lose the foreign taxes.  It isn't clear to us the best way to use these (i.e., in a taxable account or in a retirement account).

bulletVanguard Global ex-U.S. Real Estate Fund Admiral Shares (VGRLX).  E/R 0.18%.  This fund tracks the S&P Global ex-U.S. Property Index of international real estate stocks in both developed and emerging markets.  We expect the fact that there exists an ETF shares class of this fund will make it more tax efficient than it would otherwise be.

bulletVanguard Global ex-U.S. Real Estate ETF (VNQI).  E/R 0.18%.  This fund tracks the S&P Global ex-U.S. Property Index of international real estate stocks in both developed and emerging markets.  Unlike virtually all other ETFs, Vanguard ETFs are only as tax efficient as their underlying open-end mutual fund -- no more and no less.  We expect that to make it fairly tax efficient -- because the ETF share class will likely be a large percentage of the fund's total assets.  For more information on ETFs, see here.

bulletDFA International Real Estate Securities Portfolio (DFITX).  E/R 0.31%.  This fund "Invest[s] in a broad portfolio of securities of non-U.S. companies in the real estate industry, including developed and emerging markets, with a focus on non-U.S. real estate investment trusts (REITs) or companies that the Advisor considers REIT-like entities."  The fund is passively managed and weights its holdings roughly in proportion to each security's market capitalization.  Country weights are generally "based on the total market capitalization of eligible companies within each country."

bulletiShares S&P World ex-U.S. Property Index Fund (WPS).  E/R: 0.48%.  This ETF tracks the S&P/Citigroup BMI World ex-U.S. Property Index.  This is an index of REIT-like companies in developed markets outside the United States.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletiShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund (IFGL).  E/R: 0.48%.  This ETF tracks the FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index of companies engaged in the ownership, disposure, and development of the Canadian, European, and Asian real estate markets.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletWisdomTree International Real Estate Fund (DRW).  E/R: 0.58%.  This ETF tracks the WisdomTree International Real Estate Index.  This is a dividend-weighted index of REIT-like companies in developed markets outside North America.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletSPDR DJ Wilshire International Real Estate ETF (RWX).  E/R: 0.60%.  This ETF tracks the Dow Jones Wilshire Ex-US Real Estate Securities Index, an equity index based upon the global (ex-US) real estate market.  The fact that this fund is all foreign companies should diversify an otherwise all-US portfolio.  For more information on ETFs, see here.

bulletFirst Trust FTSE EPRA/NAREIT Global Real Estate Index Fund (FFR).  E/R: 0.60%.  This fund tracks the FTSE EPRA/NAREIT Global Real Estate Index of real estate companies and REITS engaged in specific aspects of the North American, European, and Asian real estate markets.  The fact that this fund is about 61% foreign companies should diversify an otherwise all-US portfolio.

bulletNorthern Global Real Estate Index Fund (NGREX).  E/R: 0.65% (actually, the expense ratio is 0.75% it is temporarily reduced to 0.65%, but that could change at any time without notice).  This fund tracks the FTSE EPRA/NAREIT Global Real Estate Index of real estate companies and REITS engaged in specific aspects of the North American, European, and Asian real estate markets.  The fact that this fund is about 75% foreign companies should diversify an otherwise all-US portfolio.  This fund has a redemption fee of 2% on shares sold within 30 days of purchasing.  With its relatively high expense ratio, we see little reason to use it instead of the above alternatives.

horizontal rule

This web page contains the current opinions of Eric E. Haas at the time it is written and such opinions are subject to change without notice.  This web page is intended to serve two purposes:

bulletTo educate the public; and
bulletTo provide disclosure of Mr. Haas' opinions to prospective clients.  We believe that prospective clients are well-served by being made aware of what they are buying and what they are buying is advice that is based on these opinions.

We believe the information provided here to be useful and accurate at the time it is written.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

No investor should invest solely on the basis of information listed here.  Before investing, it is important to consult each prospective investment's prospectus and consider both its risk/return characteristics and its effect on your overall portfolio.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice.  Where specific advice is necessary or appropriate, Altruist recommends consultation with a qualified tax adviser, CPA, financial planner, or investment adviser.  If you would like to discuss the rationale or support for any particular idea expressed on this web page, feel free to contact us.

 

Home ] About Altruist ] Our Code of Ethics ] How We Save You $ ] Our Services & Fees ] Fee Comparison ] Investing Strategies ] Investments ] DFA vs. Vanguard ] Nationwide Service ] Our Guarantee ] Reading Room ] Contact Information ] Search ] Site Map ]

Send mail to ehaas@altruistfa.com with questions or comments about this web site.
Copyright 2002 - 2016 Altruist Financial Advisors LLC.
"ALTRUIST" is a registered service mark of Altruist Financial Advisors LLC.
Click here to examine our Privacy Policy.
In compliance with securities regulations, Altruist Financial Advisors LLC will not transact business in any state unless first registered there or qualified for an exemption or exclusion from registration there. Further, the advisor will not communicate any follow-up, individualized responses which render investment advisory services for compensation, unless first registered or qualified for an exemption or exclusion in the given state.