There are no two ways about it—real estate should be a core holding in almost all portfolios, financial experts remind. And for good reason: real estate has a low correlation with equities. Plus, it comes hand-in-hand with the added benefit of resistance to inflation, constituting a magnificent tactic for portfolio-diversification seeing how the ETF delivers consistent returns that don’t always line up with bull markets in equities in bonds.
Although it is true that the effects of the US housing market crash were strongly felt by real estate companies and investors alike, it is important to keep a global perspective: these events are relatively rare over the long-haul.
Vanguard Puts $35.82 BN Where Its Mouth Is
The Vanguard REIT Index Fund, with its $35.82bn worth of investments, actually has a solid history of delivering strong performance at a low cost. Not only has it outperformed competitors like the iShares Dow Jones US Real Estate ETF (IYR) in the past five years, but it’s done so at a bargain basement 0.12% management expense ratio— that’s 72% less than the IYR ETF.
If you’re ready to take the plunge into the U.S. real estate market, then the low-cost Vanguard U.S. REIT fund invests in stocks issued by real estate investment trusts might be right for you.
Diversified Real Estate Holdings
An excellent option for investors looking to gain exposure to U.S. real estate, the index is composed of REITs—153 of them to be exact—featuring companies that purchase office buildings, hotels, and other real estate properties. The index is composed of stocks of publicly traded equity REITS and seeks to replicate the MSCI U.S. REIT Index’s market cap allocations.
The MSCI U.S. REIT Index is a comprehensive index comprised of U.S. equity REITS, as it represents about 85% of the present U.S. REIT universe. Seeing how this fund covers a very large portion of the U.S. REIT market, it becomes a fantastic option for investors who want a trade vehicle to access the U.S. real estate market.
Quarterly Dividends At 3.88%
With a low expense ratio—at just 0.12%—VNQ offers one of the cheapest REIT ETF investment opportunities in the market. It discloses holdings on a monthly basis and has a 3.88% 12-month yield 3.88%, paying dividends every quarter.
In short, this ETF offers high potential for investment income hand-in-hand with some growth. If you are looking for considerable liquidity as well as good risk diversification for your stocks and bonds, then this is the ETF for you.
And now, with iBillionaire’s new Real Estate Strategy, you can add the VNQ ETF to your billionaire-powered portfolio and watch your net worth grow.