-
Canadian Apartment Properties Real Estate Investment Trust (CAR.UN)
-
BMO Equal Weight REITs Index ETF (ZRE)
-
Dream Industrial Real Estate Investment Trust (DIR.UN)
Q: Hi, a few years ago I got tired of trying to pick winners in the REIT space and invested in your model portfolio choice of ZRE. I'm wondering now if some of the equal weight holdings are starting to be a drag on performance, that may continue into the medium term? The same average yield could probably be obtained with a few individual securities like CAR and DIR with maybe a better outlook for capital appreciation in that same medium term (understanding that you would be moving up the risk scale again)? Do you think you would do better as a stock picker in this space today or stick with the ETF? If the former, do you have better suggestions today than the two named? Thanks.
5i Research Answer:
CAR and DIR would still be amongst our favourites. GRT.UN could be added as well. ZRE is the 'easy' choice, but if interest rates peak as expected the upside leverage of a few stocks (versus 24 in the ETF) is probably going to work better, with a (as noted) uptick in risk.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZRE.