Q: On March 4 you wrote, "We do like the outlook for REITs and think that as rates stabilize and even decline, the sector should benefit. Out of the two REITs mentioned we like XRE better due to the bigger size and slightly lower expense ratio."
On January 12 you wrote, "HCRE is an equal-weight REIT ETF, which has a small AUM of $48.3M, a relatively low MER of 0.33%, and a yield of 5.9%.
ZRE is also an equal-weight REIT ETF, but has a much larger AUM of $583.7M, an MER of 0.61%, and a yield of 5.1%. XRE is not equal-weight, has a large AUM of $1.0B, a yield of 5.4%, and an MER of 0.61%.
ZRE has outperformed XRE over a long period of time, and thus we like the equal-weight approach."
Can you please clarify your preference for either XRE or ZRE and the main reason for that preference? I gather your preference is for ZRE given it is part of one of your portfolios. It is just that your March 4 response has led me to wonder.
Thanks as always for your expertise.
On January 12 you wrote, "HCRE is an equal-weight REIT ETF, which has a small AUM of $48.3M, a relatively low MER of 0.33%, and a yield of 5.9%.
ZRE is also an equal-weight REIT ETF, but has a much larger AUM of $583.7M, an MER of 0.61%, and a yield of 5.1%. XRE is not equal-weight, has a large AUM of $1.0B, a yield of 5.4%, and an MER of 0.61%.
ZRE has outperformed XRE over a long period of time, and thus we like the equal-weight approach."
Can you please clarify your preference for either XRE or ZRE and the main reason for that preference? I gather your preference is for ZRE given it is part of one of your portfolios. It is just that your March 4 response has led me to wonder.
Thanks as always for your expertise.
5i Research Answer:
For liquidity purposes and a better trading 'profile', we like XRE due to its larger AUM. But, for the portfolio structure, and the ability to outperform as underperforming REIT sectors see outsized returns, we like the equal-weight approach of ZRE. Much depends on the individual preferences for each investor; style of an equal-weight approach and historical outperformance or liquidity.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZRE.