Top 10 Global Real Estate ETFs

There is currently an expanding list of nearly a dozen ETFs oriented to primarily to global REITs (Real Estate Investment Trusts) with more on the way no doubt. In the following analysis we stick with our top ten themes while mentioning, where applicable, other choices. Given the limited choices anyway it represents the ETFs available.

The established global REIT market has been volatile and rocked by the eurozone crisis and contagion to other global markets. In the list you'll also note some China related issues which have caused investors concern over apparent property bubbles in both mainland China and Hong Kong. This issue had driven down prices but increased yields which are a staple and attraction for most investors. REITs remain popular with investors seeking greater dividends and income although many current yields remain historically low perhaps misleading some investors expecting more. Further, some with higher dividends feature return of principal which should also be evaluated.

One caution for this list is many of the ETFs in the list are new and/or have lower AUM (Assets under Management) than we would ordinarily prefer. This is a caution most investors should heed particularly when placing trades. "Limit orders" are always an important technique when trading and it becomes more important with less liquid securities.

While issuers in the list are substantial there's nothing to say an ETF won't fail or be rolled in with another if it becomes unprofitable. For most ETFs this means AUM over $25M at some point.

We're not ranking these ETFs favoring one over another so don't let the listing order mislead you. Although we may use some of these in ETF Digest portfolios it's not our intention to recommend one over another.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that we're sorting these by both short and intermediate issues we have split the rankings as we move from one classification to another.

Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity

Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity

Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity

Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

#10: Guggenheim Alpha Shares China Real Estate ETF (TAO)

TAO tracks the Alpha Shares China Real Estate Index, which covers the greater China region including Special Administrative Regions like Macau and Hong Kong. It was launched in December 2007. The expense ratio is .65%. AUM equal $18.5 million and average daily trading volume is 19K shares.

As of early February 2012 the annual dividend yield was 1.31% and YTD return 15.85%. The one year return was -14.91%.

Data as of First Quarter 2012

TAO Top Ten Holdings & Weightings

1. Link Real Estate Investment Trust (00823): 7.96%
2. China Overseas Land & Investment Ltd. (00688): 5.99%
3. Swire Pacific Ltd. (00019): 5.41%
4. Cheung Kong Holdings, Ltd. (00001): 5.29%
5. Sun Hung Kai Properties, Ltd. (00016): 4.94%
6. Wharf holdings (00004): 4.89%
7. Hongkong Land Holdings Ltd. (H78): 4.77%
8. Sino Land Co. Ltd. (00083): 4.62%
9. Henderson Land Development Co., Ltd. (HLDVF): 4.56%
10. Hang Lung Group Ltd. (00010): 4.28%

 

#9: iShares FTSE EPRA/NAREIT Developed Asia ETF (IFAS)

IFAS follows the FTSE EPRA/NAREIT Developed Asia Index. The fund was launched in November 2007. The expense ratio is .48%. AUM equal $21 million and average daily trading volume is 5K shares. As of early February 2012 the annual dividend yield was 4.36% and YTD return 14.53%. The one year return was -10.91%.

A sister offering is IFEU (iShares FTSE EPRA/NAREIT Developed Europe ETF) which follows the same methodology as IFAS but applied to European offerings. The fund was launched in November 2007. The expense ratio is .48%. AUM equal $16 million with average daily volume is 7K shares.

Data as of First Quarter 2012

IFAS Top Ten Holdings & Weightings

1. Sun Hung Kai Properties, Ltd. (00016): 9.29%
2. Westfield Group (WDC): 7.35%
3. Mitsubishi Estate (8802): 6.15%
4. Mitsui Fudosan Co., Ltd. (8801): 4.80%
5. Sumitomo Realty & Development Co., Ltd. (8830): 3.61%
6. Link Real Estate Investment Trust (00823): 3.26%
7. Hongkong Land Holdings Ltd. (H78): 3.18%
8. Westfield Retail Trust (WRT): 3.10%
9. Stockland (STKAF): 3.10%
10. Wharf holdings (00004): 2.80%

#8: Cohen & Steers Global Realty ETF (GRI)

GRI follows the Chen & Steers Global Realty Majors Index which is a free-float adjusted, modified market capitalization-weighted index of global real estate equities that are selected by Cohen & Steers investment committee. The fund was launched in May 2008.

The expense ratio is .55%. AUM equal $55 million with average daily trading volume 10K shares. As of early February 2012 the annual dividend yield was 3.91% and YTD return 9.24%. The one year return was 1.00%.

Data as of First Quarter 2012

GRI Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 4.04%
2. Mitsubishi Estate (8802): 3.88%
3. Public Storage (PSA): 3.77%
4. Sun Hung Kai Properties, Ltd. (00016): 3.63%
5. Westfield Group (WDC): 3.60%
6. Unibail-Rodamco SE (UL): 3.43%
7. Equity Residential (EQR): 3.30%
8. HCP Inc (HCP): 3.18%
9. Ventas Inc (VTR): 3.06%
10. Boston Properties Inc (BXP): 2.83%

#7: First Trust EPRA/NAREIT Global Real Estate ETF (FRR)

 

FFR follow the FTSE EPRA/NAREIT Developed Index which tracks companies in the North American, European and Asian markets. The fund was launched August 2007. The expense ratio is .60%.

(Commission free trading at E*TRADE.) AUM equal $78 million and average daily trading volume is less than 22K shares. As of early February 2012 the annual dividend yield was 2.30% and YTD return 8.91%. The one year return was -.58%.

Data as of First Quarter 2012

FFR Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 4.74%
2. Sun Hung Kai Properties, Ltd. (00016): 3.12%
3. Westfield Group (WDC): 2.59%
4. Mitsubishi Estate (8802): 2.25%
5. Unibail-Rodamco SE (UL): 2.21%
6. Public Storage (PSA): 2.19%
7. Equity Residential (EQR): 2.11%
8. HCP Inc (HCP): 2.04%
9. Ventas Inc (VTR): 1.97%
10. Mitsui Fudosan Co., Ltd. (8801): 1.87%

#6: WisdomTree Global ex-U.S. Real Estate ETF (DRW)

DRW follows the WisdomTree Global ex-U.S. Real Estate Index follows companies with market capitalizations greater than $1 billion including REITs, real estate operating companies, real estate development companies, and may include Passive Foreign Investment Companies (PFICs). The fund was launched in June 2006.

The expense ratio is .58%. AUM equal $113 million and average daily trading volume is near 57K shares. As of early February 2012 the annual dividend yield was 6.30% and YTD return 12.37%. The one year return was -5.91%.

Data as of First Quarter 2012

DRW Top Ten Holdings & Weightings

1. Westfield Group (WDC): 9.24%
2. Sun Hung Kai Properties, Ltd. (00016): 3.79%
3. Stockland (STKAF): 3.59%
4. Cheung Kong Holdings, Ltd. (00001): 3.41%
5. Unibail-Rodamco SE (UL): 2.76%
6. GPT Group (GPT): 2.25%
7. CFS Retail Property Trust (CFX): 2.14%
8. Mirvac Group (MGR): 1.80%
9. Riocan Real Estate Investment Trust (RIOCF): 1.77%
10. Daito Trust Construction Co Ltd. (1878): 1.68%

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