In addition, many of these REITs are already diversified in their own by focusing on a large number of different real estate, sometimes from different areas and regions. Nevertheless, there is still a way to significantly increase this diversification: via one or more ETFs.
Let's take a look at an exciting REIT-ETF with an interesting dividend yield and look at what else this passive fund has to offer.
The iShares Global REIT ETF
Actually, this is the iShares Global REIT ETF such a paper, which unites a large part of different REITs. After all, as the name implies, the passive fund invests in real estate investment trusts around the world, which of course combines a colorful mix of such shares.
In addition, the passive fund can also shine with a dividend yield that is in principle of interest for such a broad mix. In the past twelve months alone, the ETF poured out a total dividend of $ 1,042. A value that equates to a dividend yield of 3.72% at a current price level of $ 27.99. Definitely not a bad value for such a strong panning.
The distributing, fully replicating passive fund can also shine with a comparatively low total expense ratio of only 0.14%, which is certainly quite favorable for such a cheap, regionally diversified mix. In addition, the fund volume of more than 1.8 billion US dollars is probably large enough so that investors here do not have to worry about the sustainability or a sudden end of this fund. Definitely a very exciting mix that you get here for little money.
The look in the ETF
However, looking at the ETF, we need to know a few things that you, as an investor, definitely have to put up with. It seems little surprising that the internal allocation is a passive fund that invests almost 100% in real estate. Only a negligible share of 0.2% is poled on financial companies in the field of REITs. Actually surprising that the odd here is not at full 100%.
However, in the final analysis, for many, the regional breakdown of this passive fund is likely to be more decisive. However, with regard to the country structure, we also have to accept some restrictions. More than 66% of the REITs come from the US, only smaller positions of almost 7% come from Japan. Other relatively small sectors also come from the eurozone, Asia and Australia, which also account for around 5%, along with other small positions that make the overall mix, hm, more diversified.
To put it quite clearly: Investing in the iShares Global REIT ETF invests primarily in US equities. However, many of these real estate investment trusts come from the US anyway, which should not be such a surprise.
Do you need an ETF here?
The exciting question may be the conclusion, however, if you really need an ETF on REITs at this point. Many of the real estate investment trusts are already invested in their own structure over several hundred, sometimes even a thousand real estate and also rely on different areas.
Investors who want to invest in REITs should therefore seriously consider whether a passive fund is the best way to do so. Or, whether single, well-funded and high-dividend real estate investment trusts are not the best option in the long run to move into this area.
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Vincent does not own any of the securities mentioned. The Motley Fool does not own any of the stocks mentioned.
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