ETF Investing: A New REIT On The Block

In a previous post I mentioned the obvious disconnect that occurred earlier this year between domestic REITs and those that invest in the global arena.

The WSJ just featured an article called “Foreign Real Estate Funds Boom,” which analyses several REITs covering a variety of countries. Most of them are well known, however, foreign funds are not the cheapest when it comes to annual operating expenses.

However, my contention has always been that cost is relative to performance. If you had owned EGLRX for example with an over 40% return over the past year, the expense ratio would not have mattered. Nevertheless, many investors prefer a low cost solution along with great performance.

As has been the case, ETFs have come to the rescue over the past 5 years. The new kid on the block for international REITs is a Wisdom Tree International Fund (DRW), which focuses on Australia and some Asian countries. It’s only been around a short while, but for that period it has closely tracked the above mentioned EGLRX.

I will add DRW to the StatSheet (sector section and master List) starting with this week’s issue. While there is not enough data available to clearly identify its long-term trend, having it included already gives us the opportunity to monitor it and see how the momentum figures develop over the next few months.

If you believe that the performance of foreign REITs is to continue, you can invest in this new ETF now, but it is essential that you use my recommended sell stop discipline, just in case the market turns against you.

I have currently no investments in these funds.