Play Foreign Real Estate With ETFs
Other Ways to PlayAnother ETF in the mix is the SPDR Dow Jones Wilshire International Real Estate (RWX) ETF. Because this fund is weighted by market cap, it looks a little different. Australia still figures prominently, with 19.79% of the fund's weight (and again Westfield is the largest stock with 6.66%), but Japan is a touch larger at 20.11%, and the U.K. plays a bigger role in RWX at 16.35%.
The yield on RWX is likely to be 2.05% (the yield of the index less the 0.60% expense), which is obviously less than DRW, but the trade-off might be better country diversification.
Recently listed is the Alpine Global Premier Properties Fund (AWP), a closed-end fund. Because the fund is brand-new, there's no information on its holdings, but lead manager Sam Lieber was recently on CNBC and mentioned a couple of stocks he liked, including Norwegian Properties and Orient-Express Hotels (OEH), so it's possible that they are in the fund.
Alpine also has an open-end fund that could be a template for AWP -- the Alpine (EGLRX) International Real Estate fund (EGLRX).AWP has set the dates and amounts for its first few monthly dividends, and the fund yields 7.60%. According to the prospectus, the fund can use leverage and options but does not plan to. I have to wonder whether the first few payouts represent the returning of some capital. I was not able to get an answer from the fund -- they are not required to give these details until the end of the year. Also contributing to the yield -- again, I think it will take a while before this kicks in -- is that one-third of the fund will use a dividend-capture strategy within the international real estate space. As a quick reminder, dividend capture means holding a stock just long enough to get the dividend at the qualified tax rate, and then rotating to a similar stock to capture that dividend, and then going back to the first stock, and so on.
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