Play Foreign Real Estate With ETFs

Last September, I wrote an article about the RMR Asia Pacific Real Estate Fund (RAP Quote), in which I voiced a negative opinion. This turned out to be very wrong.

Since that article, I have tried to learn more about foreign real estate, and the investment industry has delivered several new exchange-traded products that invest in the space. I'll discuss some of these new products today.

It is worth mentioning that foreign real estate companies do not necessarily have very high yields, such as you might expect with U.S.-listed real estate investment trusts. The REIT structure in the U.S. requires that companies pay out 90% of their earnings to shareholders. Some other countries are starting to implement similar requirements, but in general the funds discussed here hold all manner of real estate companies, which can be different from REITs.

For the Dividend-Minded

The newest fund to list is the WisdomTree International Real Estate (DRW Quote) ETF. It is dividend-weighted and based on an index WisdomTree created to weight the components by their respective dividends. Although no dividends have been paid, it appears that DRW will yield 2.50% (the yield of the index minus the 0.58% expense). ...