I was thinking about real estate too, given that valuations are pretty good right now. After mass vaccine rollout and the pandemic behind us, it should bounce back. ZRE is a good choice given that it's an equal-weight methodology, so you have no overexposure to one sub-sector. The yield looks pretty attractive too close to 5%. Thanks for bringing this up!
Last year, I decided we should have some additional real estate exposure (we have Riocan in taxable account and reluctant to sell because of low acb). I put about $5k each of XRE and ZRE into our TFSAs. Problem with these ETFs, is that you get the bad with the good. XRE down 18% and ZRE down 11.75% since this time last year. Even at current low REIT valuations, yields (4.75-5%) are not much better than the banks (4-5.25%) , so why buy REIT ETFs? Will they bounce back soon? Seems unlikely given the headwinds for many REITs and the less than stellar yields.
Should have bought a 2021 thread...
You're thinking sh*t will hit the fan with all this right wing extremist turmoil?
No, has nothing to do with that. This is what I am required to purchase to maintain my asset allocation. I'll be buying some stocks too, but these were the major purchases.
www.canadianmoneyforum.com
So you've decided to decrease your fixed income and increase your equity asset allocations.
I think I already previously posted my plan of not buying any fixed yielding less than 2%. Too much risk.
XRE is an interesting one for sure. Over 18 years it has performed at 8.9% CAGR (total return including distributions) which is very strong. That suggests this is a legit asset class with good long term returns.
As someone who follows the advice of others(in spite of warnings of due diligence) I have owned VRE for years and still do. However I have to wonder if demand for office space is permanently diminished due to how well we have adapted to working from home. Does this not play a role in the REIT performance going forward?
I am sure it does. I have talked to business owners who have decided not to renew their leases or at least reduce the space rented. I have also talked to an employee of a large company who is in involved in the process of renting space in a new office tower. They are not filling that space at the rate they would like.
I am bullish on the REIT space as well. I was looking at the top options for this and the final battle was between ZRE and XRE.
