REITs are a wonderful investment opportunity. But to buy an investment or investment class without knowledge is a foolhardy approach. The mantra often repeated is “buy what you know.” So I understand Target (TGT) and Coca Cola (KO) but I don’t want to focus on just consumer discretionary spending. Although some brick-and-mortar retailing is dying, real estate isn’t.
To get beyond buying what you know, start to learn more about a different sector. Learn about the ETFs that are central in the REIT universe. One way to learn is to read the FAQ by NAREIT. The link to the PDF is shown below.
So that you can also explore some alternatives, here are some REIT ETF’s you may want to consider. Buy what you know when you know more.
ETF Name and (Ticker Symbol) Exp. Ratio & Yield
Vanguard Real Estate ETF (VNQ) 0.12% Yield 4.21%
Schwab U.S. REIT ETF (SCHH) 0.07% Yield 3.26%
iShares Global REIT ETF (REET) 0.14% Yield 5.14%
Fidelity MSCI Real Estate Index ETF (FREL) 0.08% Yield 4.93%
iShares Mortgage Real Estate ETF (REM) 0.48% Yield 9.23%
PowerShares KBW Prem Yield Equity REIT ETF (KBWY) 0.35% Yield 7.32%
Then, after you read the PDF, especially page 6, can you tell why REM has the highest yield? Why is it different?