The growing array of alternative investment products now includes another exchange-traded fund focused on global real-estate investment trusts (REITs): The iShares Global REIT ETF, which trades on the New York Stock Exchange under the “REET” ticker symbol.
The iShares Global REIT ETF joins a handful of other global REIT ETFs, which include the SPDR Dow Jones Global Real Estate ETF (RWO), First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR), Cohen & Steers Global Realty Majors (GRI) and FlexShares Global Quality Real Estate Index Fund (GQRE). The iShares Global REIT differentiates itself from the competition by tracking the FTSE EPRA/NAREIT Global REIT Index, which is composed of property-company constituents trading on a variety of global exchanges including emerging markets, and through pricing. The new iShares fund carries a 0.14% expense ratio, versus 0.45% to 0.50% for the other global funds.
Currently, the iShares Global REIT holds a diverse mix of 239 financial-sector stocks, the largest holding of which is Simon Property Group, accounting for 5.4% of the fund’s holdings. Unibail-Rodamco and Public Storage are the fund’s second- and third-largest holdings, although no holding other than Simon Property Group accounts for more than 3% of the fund’s assets. U.S. REITs make up the fund’s largest geographical concentration, at 6.3% of assets; with Australian, Japanese, and U.K. REITs occupying spots #2-4.
REITs are increasingly popular in the low-yield, low-interest rate environment in which investors find themselves. Income-oriented investors are also concerned about the impact rising interest rates will have on their investments, as interest rates around the world have been kept artificially low by growth-minded central bankers, and commonsense indicates that rates inevitably must start rising at some point, probably soon. But REITs don’t behave like “traditional fixed-income” investments during periods of rising interest rates, according to a recent study conducted by Altegris, which found that REITs were positively correlated to interest rates in five out of seven periods of rising rates between 1972 and 2013.
The iShares Global REIT ETF launched last month on July 10, 2014 and closed on its opening day at a price of $25.15. Its shares closed at $24.83 on August 6.