Global Real Estate
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 similar-seeming 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)
- DFA Global Real Estate Securities Portfolio (DFGEX). E/R 0.22%. This fund is "designed to offer a consistent and diversified investment in real estate investment trusts (REITs) and REIT-like securities in the US, developed markets outside the US, and emerging markets."
- Avantis Real Estate ETF (AVRE). E/R 0.17%. This fund "provides exposure to real estate securities focused on income derived from real estate investments and structured in a similar way as real estate investment trust (REITs)."
- DFA Global Real Estate ETF (DFGR). E/R 0.22%. This fund is "designed to offer a consistent and diversified investment in real estate investment trusts (REITs) and REIT-like securities in the US, developed markets outside the US, and emerging markets."
- iShares Global REIT ETF (REET). E/R 0.14%. This fund tracks the FTSE EPRA Nareit Global REITS Net Total Return Index.
- Northern Trust Global Real Estate Index Fund (NGREX). E/R 0.48%. This fund tracks the MSCI ACWI IMI Core Real Estate Index.
- SPDR Dow Jones Global Real Estate ETF (RWO). E/R 0.50%. This fund tracks the Dow Jones Global Select Real Estate Securities Index.
- First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR). E/R 0.60%. This fund tracks the FTSE EPRA/NAREIT Developed Index.
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. In general, it is probably best to put global REIT funds in a retirement account.
- Avantis Real Estate ETF (AVRE). E/R 0.17%. This fund "provides exposure to real estate securities focused on income derived from real estate investments and structured in a similar way as real estate investment trust (REITs)."
- DFA Global Real Estate ETF (DFGR). E/R 0.22%. This fund is "designed to offer a consistent and diversified investment in real estate investment trusts (REITs) and REIT-like securities in the US, developed markets outside the US, and emerging markets."
- iShares Global REIT ETF (REET). E/R 0.14%. This fund tracks the FTSE EPRA Nareit Global REITS Net Total Return Index.
- SPDR Dow Jones Global Real Estate ETF (RWO). E/R 0.50%. This fund tracks the Dow Jones Global Select Real Estate Securities Index.
- First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR). E/R 0.60%. This fund tracks the FTSE EPRA/NAREIT Developed Index.
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:
- To educate the public; and
- To 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.