ETF Talk: Global Real Estate is on the Rise

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

The real estate market in the United States appears to be recovering, based on the latest data, and the sector seems to be appreciating in many other parts of the world, too. The real estate bubble that captured great attention during the past few years now appears to have bottomed and investors are taking notice. One exchange-traded fund (ETF) that I like as a way to bet on a global real estate rebound is the SPDR Dow Jones Global Real Estate ETF (RWO).

The ETF seeks to replicate, as closely as possible and before expenses, the price and yield performance of the Dow Jones Global Select Real Estate Securities Index, which is designed to track the global real estate market. The real estate market that I personally follow most closely is the one in the United States. From my vantage point, there is much encouraging news. One data point that I noticed this week was a decline in the number of existing homes that are for sale. The National Association of Realtors reported on Monday that only 2.1 million existing homes are on the market for prospective buyers. It marks a 22% reduction in the number of homes available at for sale, compared to the same time last year.

Housing demand is growing elsewhere, too. That wave of growth is something that a California surfer like me couldn’t help but want to catch.

The chart below shows that RWO had pulled back earlier this month but is on the rise again. The dip gives investors who are interested in gaining global real estate exposure a chance to avoid buying when the fund’s share price is at a peak.

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Another appeal of the fund is that it offers a dividend yield of 3.11%. RWO also gives investors international exposure, with the United States amassing slightly more than half of the fund’s holdings. The nations that account for RWO’s top five holdings, as of Nov. 16, were: the United States, 53.63%; Japan, 8.73%; Australia, 8.37%; Hong Kong, 5.89%; and Canada, 4.79%. As far as the main categories of the fund, regional malls, 17.21%, and real estate operating companies, 15.14%, are the two biggest subsectors.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You may see your question answered in a future ETF Talk.

 

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I am sending you this week's Dividend Pro early, in advance of Thursday's Thanksgiving holiday. I hope you and your family enjoy a happy holiday season. Markets recovered somewhat in the past few days, and you saw that in your Dividend Pro portfolio. You were, however, stopped out of Vanguard Natural Resources (VNR) for a loss. This week Dividend Pro recommendation is way to profit from the United States' emerging energy independence, which I discussed in detai

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