peteyperson wrote: I am wondering about US REITs. Perhaps you can weigh in here. I had a plan to allocate 26% of the portfolio to two property mutual funds, 5% sales load and 1.76% mgmt fee. Est. 6.5% gross nominal return. I do wonder how realistic that is for the US
The Morgan Stanley REIT index (the RMS) yields about 5.5% dividends now. Raddr has looking into historical returns of REITs and concluded that real returns are ballpark dividend yield minus 1%. So 4.5% real return estimated going forward. Add your inflation estimate for nominal return estimate.
also that I'll have 26% REIT exposure in US$, 10% in US equities, some EM as well that can sometimes be linked to the US$ also. My total portfolio exposure to the US$ is likely to then be about 40%. I wonder whether a half & half UK expense property fund and cheaper US REIT ETF would be a better option despite the theoretically lower return.
I don't know about putting lumping US and EM assets. Arent' they typically pretty uncorrelated? I would not personally be comfortable having 35% of my portfolio in one foreign country and subject to that currency risk.
it becomes 1.325% vs. a 5% sales load & 1.76% mgmt fees in the UK. The net difference would be a 0.11% bump in w/d rate exc the lost investment to sales loads. How do you feel about that sort of scenario if that was you?
I think I would like getting the diversification and lower expenses of the US REITs, but I wouldn't over-do it. Maybe a cheaper UK option will be available down the road.
Are there any US REIT ETFs you think are good? There seem to be actively managed ones, a Wilshire index REIT and several others to choose from.
I'm not familiar with the ETFs since I'm comfortably ensconced in Vanguards REIT index fund. However, I would choose an index based ETF with the broadest index (I think the Dow REIT index is too narrow ? from memory) and the lowest expenses I could find.
Regards,