How This Real Estate Fund Rides Recent Recovery

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
[house in a shopping cart]

The ETF Talks of the past few weeks have introduced you to some of the most prominent funds offered by Vanguard, a large and cost-effective exchange-traded fund (ETF) provider. Today, we continue that series with Vanguard Real Estate Investment Trust ETF (VNQ). With $43.1 billion in assets under management, VNQ is Vanguard’s fourth-largest ETF. Its competitive 0.1% expense ratio is 93% lower, according to Morningstar, than the average for similar funds.

This ETF, unlike the broader funds we have introduced so far, focuses on a particular sector. VNQ tracks an index that measures the performance of publicly traded equity real estate investment trusts (REITs). VNQ matches the holdings of the index as closely and as proportionately as possible.

VNQ is up 20.76% so far in 2014, as the chart below demonstrates, and it has fully recovered from a recent September stumble. The fund also offers investors a dividend yield of 3.51%.

VNQ_102914

As a REIT ETF, all of VNQ’s assets are invested in the real estate sector. VNQ’s top 10 holdings comprise 38.24% of its portfolio, a higher percentage than its more diversified counterparts. These top holdings include Simon Property Group, Inc. (SPG), 8.69%; Public Storage (PSA), 4.14%; Equity Residential (EQR), 3.59%; Health Care REIT, Inc. (HCN), 3.44%; and ProLogis, Inc. (PLD), 3.20%.

REITs are legally required to pay out 90% of their taxable income as dividends, so investors receive steady income no matter how the overall market performs. If this income-oriented investment sounds enticing to you, you may want to take a look at Vanguard REIT ETF (VNQ).

Exclusive  Scooping up My Favorite Stock Investments at Sale Prices

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 about Vanguard’s developed market ETF. I also invite you to comment in the space provided below.

previous article

As was widely anticipated, today the Federal Reserve announced the end of its massive bond-buying program.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE