Pam WalkleyREAL ESTAT
PamWalkley,foundingeditorofMoneyand
formerpropertyeditorwithTheAustralian
FinancialReview, hashands-onexperience
ofbuying,building,renovating,subdividing
andsellingproperty.TE
Spice up your portfolio
I
t’sa goodtimeforAustralianreal
estateinvestors– manyofwhomare
obsessedwiththelocalhousingmar-
ket– toconsiderdiversifyingsomeoftheir
fundsintoglobalrealestate.Thelaunch
ontheASXearlierthisyearofa second
exchangetradedfund(ETF)concentrating
onworldpropertyhashelpedmakethisa
relativelyeasystrategytopursue.It’salso
veryaffordable,asyouneedonly$500to
buyintoanETF.
Aswell,thereareover 60 managedfunds
inthecategorytochoosefrom,according
toresearchfromMorningstar,andthetop
threeachievedone-yearreturnsofmore
than20%intheyeartoMay31.
Manysharemarketinvestorshave
embracedtheimportanceofincludingoff-
shoresharesintheirportfoliosgiventhe
localmarketaccountsforonly2%ofthe
worldwidebourse.Similarly,Australian
realestateinvestmenttrusts(A-REITs)
representonly3%oftheworld’sREITs.
VanEckAustralialaunchedVanEckVec-
torsFTSEInternationalProperty(Hedged)
(REIT)ontheASXinMarch.TheETF
givesinvestorsaccesstoa diversifiedport-
folioofinternationalpropertysecurities
fromdevelopedmarkets(exAustralia)with
returnshedgedintoAustraliandollars.
Theindexthatthefundseekstoreplicate- theFTSEEPRA/NAREITdevelopedex
Australiarentalindex,AUDhedged(net
tax)– captures 305 REITsrepresentingthe
world’sdevelopedmarkets.Themanage-
mentfeeis 0.43%.
Listedpropertyhaslongbeena com-
pellingassetclassforAustralianinvestors,
accordingtoFTSE,becauseit provides
regularincomestreams,diversificationand
long-termcapitalappreciation.
“Investorappetiteforaccesstointerna-
tionalpropertystockscontinuestogrow,
creatinga demandforindexesthatreflect
thecommercialrealestatemarketwiththe
addedliquidity,transparencyandregula-
tionassociatedwithinvestinginpublicly
tradedstocks,”EvanOng,FTSE’smanaging
usuallyrequirea moresignificantoutlay- often$20,000ormore– andthefees are
usuallysignificantlyhigherthanforETFs.
TheQuayGlobalRealEstateFund has
returned9.67%a yearforthethreeyears
toMay31,makingit thetopperformer
overthatperiod,accordingtoMorningstar
dataon 63 globalrealestatefunds.(See
morningstar.com.auformoreinformation.)
Quay’sone-yearreturnis 20.88%.
Thefundinvestsin 30 to 60 realestate
stocks,aimingtogeneratea realtotalreturn
ofat least5%paaboveCPIoverfiveor more
years,beforefeesandcosts.Geographically
itstopthreeholdingsareintheUS(61.4%),
theUK(10.3%)andAustralia(9.2%).Its
biggestsectorinvestmentsaremanufac-
turedhousing,multifamily/apartments and
studentaccommodation(37.5%),storage
(14.4%)andhealth(10.2%).Theminimum
investmentis $20,000andit payshalf-yearly
distributions.Themanagementfeeis 0.82%.
It alsohasanmFundversionforinvestors
whoprefertoinvestviatheASX.
ResolutionCapitalGlobalProperty (unhe-
dgedseries11)hasbeenthetopperformer
overfiveyears,returning12.95%patoMay
31,accordingtoMorningstar.Theone-year
performanceis 18.4%.It givesinvestors
exposuretotheunderlyingreturnsof some
oftheworld’shighest-qualityrealestate
assetsthrougha professionallymanaged
portfolioofglobalREITsandproperty com-
panies.Itsaimstoprovideinvestorswith
income(twice-yearlydistributions)plus
thepotentialforlong-termcapitalgrowth
sourcedfromglobalreal-estate-based rev-
enuestreams.Itsinvestmentsareconcen-
tratedinthedevelopedmarketsofNorth
America,theUK,EuropeandAsiaPacific.
Theminimuminvestmentis $25,000 and
themanagementfeeis 1.05%.
Exchange traded funds give investors a new opportunity to explore the world
director, ETP Relationships, Asia, said at
the VanEck fund’s launch.
Then new ETF joins the SPDR Dow Jones
Global Real Estate Fund (DJRE), which has
returned 10.3% a year to May 31 since it list-
ed in November 2013. The one-year return
is 16.01% and its management fee is 0.5%. It
aims to provide investment returns, before
fees and other costs, that closely correspond
to the performance of the Dow Jones Global
Select Real Estate Securities Index. It holds
more than 200 listed property companies,
with 58% in the US.
Unlike the VanEck fund, the SPDR ver-
sion also invests in Australian property
companies, which represent 5% of its port-
folio. Japanese companies make up 12.3% of
the portfolio, the second highest allocation.
The fund pays distributions twice a year
and has a dividend yield of 3.86% and is not
hedged. The VanEck ETF plans to pay divi-
dends quarterly.
Those looking to invest in an actively
managed portfolio of global property
assets, rather than passively replicate an
index, have an array of managed funds to
choose from. The downside is that these