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Home > A New Way to Ride the Overseas Real Estate Boom

A New Way to Ride the Overseas Real Estate Boom

June 6th, 2007 at 03:17 pm

Now is an opportune time to take advantage of a new offering that became available for investors looking to capitalize on the continued boom in real estate investment trusts (REIT) overseas. While a lot of the U.S. REITs have either lost their momentum or have seen their share prices rise so much that their yields have dropped substantially, there are numerous opportunities overseas. Some of these can be purchased in the US as ADRs, but ideally, by letting subject matter experts manage a portfolio of 224 companies spread throughout 19 countries, you can minimize your costs, diversify your risk, and frankly, increase your odds of successfully exceeding the returns of any individual holdings as well as the U.S. indices.

WisdomTree International Real Estate Fund (DRW) has a respectable expense ratio of 0.58%. The weighting is primarily in the countries Australia, Hong Kong and Japan; a third of the ETF is in Europe. The firm claims a backtested return of over 14% over the past 10 years, trouncing the S&P500 return of around 8%. I would certainly recommend this ETF as a 5-10% portion of any portfolio given its international diversification, its sector diversification and its ability to withstand market downturns due to the high yield component of the individual holdings. Granted, the international and emerging markets have been extremely hot and do carry significant volatility, but the U.S. market is somewhat saturated now as well. In addition to some commodities and some conservative components, this instrument would be a healthy addition to any portfolio absent other similar holdings.

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