Consistent followers of the ETF Talk will recognize this weekâ??s return to the world of real estate investment trusts (REITs). A REIT is a company that invests in real estate and gains revenue by renting it out to other organizations. REITs are required by law to distribute a large portion of their profits to shareholders, so they tend to pay solid dividends. One method of investing in this space is through Vanguard REIT ETF (VNQ).
This ETF tracks an index that uses a broad portfolio representative of the U.S. REIT market. Most publicly traded U.S. REITs are represented in this fund. The REITs range in purpose from those more inclined towards residential and retail properties to bigger commercial building REITs.
In the past 12 months, this fund has moved up 21.08%. This ride has not been without its bumps, as the chart below shows, but VNQâ??s progress hasnâ??t been wildly unstable either — the fund has remained above its 200-day moving average (MA) the whole time. This fund manages $53.5 billion in assets and provides a dividend yield of 3.50%. Its expense ratio, at 0.10%, is 92% lower than the category average.
As a REIT ETF, VNQ is fully invested in real estate. In terms of REIT types, the largest subsector holding in VNQ is retail REITs, with 25.60% of its assets invested there. Following that category are residential REITs, with 16.30%, and office REITs, at 16.10%.
VNQâ??s 10 largest investments make up 38% of its portfolio. Among these are Simon Property Group Inc. (SPG), 8.37%; Public Storage (PSA), 4.10%; Health Care REIT Inc. (HCN), 3.78%; Equity Residential (EQR), 3.75%; and Ventas Inc. (VTR), 3.41%.
If the REIT space interests you, Vanguard REIT ETF (VNQ) provides a quick and uncomplicated way to invest in a broad swath of the industry, wrapped in one package.
If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.
In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about an accessible S&P 500 ETF. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
I invite you to join me at the MoneyShow Las Vegas, May 12-14, 2015. With stock picking taking on renewed importance as the market shows signs of volatility, this event offers an opportunity to hear from a number of experts, including my Eagle Financial Publications colleagues Mark Skousen, Chris Versace and Bryan Perry.
Be a guest of Eagle Financial Publications and register for FREE by using priority code 038656 and calling 800-970-4355 (toll free in the United States and Canada) or signing up online.