Diversifying into Real Estate

[hlacheen]

My portfolio is currently made up of domestic/international equities. I want to diversify a bit into real estate. I'm thinking about putting 10% or so of my portfolio into SPDR DJ Wilshire International Real Estate ETF (RWX)

Here is some info about the ETF: https://www.ssgafunds.com/etf/fund/etf_detail_RWX.jsp
Here is a video interview with the guy who runs it I believe: http://publish.vx.roo.com/thestreet/port...amp;bitrate=300

The expense ratio is around 0.60% Its allocation is about 20% Australia, 19% Japan, 17% U.K., and I think 15 other countries make up 7% or less each.

Do you think will be a good addition to my portfolio? I have a very long horizon. Also, I'm just pulling 10% out of my ass... I don't know how one would figure out the proper percentage for this.

Thanks for the help.

[dopp16]

I think real estate is becoming a very necessary addition to someones portfolio. I too have a very long time horizon and my portfolio is pretty much the same mix, with the real estate. The last 3 years, the real estate has carried me, in fact averaging nearly 27%. Not that this means it is a better investment, it just further diversifies your portfolio.

[shark6]

Look at a stock chart of the big REIT's. Look at their PE's. Look at their dividend yield. Learn about how REIT's were valued prior to the last 4 years, then look at how they are valued today.

Getting in now is like buying tech in late 1999. Sure, you could make 10-15% this year, but you could just as easily blow yourself up in the process too.

I think REIT's would make a great addition to your portfolio. I just don't think now is the time to dump in a full 10% of your portfolio. Why don't you wait a couple years and see how this thing plays out, or just put in a little, like 2.5%, just to get your toes wet?

[hlacheen]

So you're basically saying there is a global real estate bubble, and I should wait for a big correction?

[Hank Scorpio]

REITs are invested in non-residential inestments. Even if they were invested heavily in residential investments, there are many signs that the bubble has hit its trough. I think that real estate is something that needs to be invested in. 10% may be too high though based on longer records (20+ years). I would go with 5% and look to invest in a REIT. I would suggest using a screener at MorningStar and picking a 4 or 5 star REIT.

[squiffy]

This seems like a really bad time to get into REITs.

[hlacheen]

I'm reading the sectors that make up RWX, and it says 54% Real Estate Operating Co., 16% Regional Malls, 10% Diversified, 8% Office, etc...

I don't understand what sector Real Estate Operating Co. means.

[Hank Scorpio]

I think its a bad time to get into pretty much anything.

[johnnyrocket]

it will diversify ur profile niceeeeely

[ahnuld]

I looked into reits in january. Seemed rediculously overpriced.