Fixed income investors looking to escape the volatility of the bond markets may want to look at real estate investment trusts (REITs) for more diversification. Rising rates are following home prices higher, which can feed into more income for REITs.
Per a Barron’s article, “Skyrocketing home prices and mortgage rates make this a tough time to buy a house. But it’s an opportunity for bargain hunters to invest in apartment real estate investment trusts, which have been clobbered this year and are down about 20% despite surging rents.”
From an investment standpoint, there is plenty of value to be had in the current market. That can translate to bargains in the world of exchange traded funds (ETFs).
“Looking back over the past decade or so, opportunities to buy shares of blue-chip apartment REIT stocks have been few and far between,” says Brad Thomas, CEO and senior analyst at Wide Moat Research and author of “The Intelligent REIT Investor.” “There is a rare sale going on right now.”
A Global REIT Option
For further diversification, one fund to consider is the Global X Super Dividend REIT ETF (SRET ). SRET seeks investment results that correspond generally to the price and yield performance of the Solactive Global SuperDividend REIT Index, which tracks the performance of REITs that rank among the highest-yielding REITs globally, as determined by Solactive AG, the provider of the underlying index.
More about the index:
- MSCI ACWI Index captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries.
- The index covers approximately 85% of the global investable equity opportunity set. DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the U.K., and the U.S.
- EM countries include: Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates.
Highlights of SRET:
- High income potential: SRET accesses 30 of the highest-yielding REITs in the world, potentially increasing a portfolio’s yield.
- Monthly distributions: SRET has made monthly distributions seven years running.
- Global exposure: SRET invests in REITs from around the globe, which can help diversify both geographic and interest rate exposure.
Additionally, SRET gives investors more diversification by looking at opportunities around the globe as opposed to staying within domestic borders. The fund screens for only the highest-yielding opportunities no matter what part of the globe that yield happens to be in.
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