Q: Good afternoon,
I know that there are diversification benefits to owning ZRE vs individual REITs in Canada. But for a 1-2% portfolio weight, I wonder if I might be better off with a name like CHP.UN purely for income given the quality of their largest tenant.
I have owned ZRE for awhile now, but have to admit to being underwhelmed by its performance.
Thoughts?
Thanks as always.
Thoughts
I know that there are diversification benefits to owning ZRE vs individual REITs in Canada. But for a 1-2% portfolio weight, I wonder if I might be better off with a name like CHP.UN purely for income given the quality of their largest tenant.
I have owned ZRE for awhile now, but have to admit to being underwhelmed by its performance.
Thoughts?
Thanks as always.
Thoughts
5i Research Answer:
We are comfortable with CHP, and it does offer a slightly higher yield than ZRE. But we would note ZRE has actually outperformed it this year (-14% vs -17%). When comparing a single security with an ETF, one will get both higher potential and higher downside risk. For a small position this wouldn't really concern us, but with single company risk, we would not say one is 'better off' because that will be the case only if CHP.UN works out well.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZRE.