Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
"Demand for REIT stocks and REIT exchange-traded funds will likely increase, if only from passive index funds that are linked to the S&P 500. The financial sector will drop to about a 12.7% weighting in the S&P 500 from 15.7%."
I'm not sure I understand how this would happen. Shouldn't any passive index fund linked to the S&P 500 already have all those stocks? It seems like the massive amounts of money in passive investments shouldn't change much and that any new demand might be more likely to come from active funds or individual investors who start paying more specific attention to real estate.
I am thinking much like you on this that it will be a net to net movement as real estate securities get moved from the financial sector to the new real estate sector. Perhaps, some new money might flow into the real estate sector as some investors might wish to overweight real estate in view of its late performance. Currently, by my math, once this change takes place I will have an estimated position of seven to eight percent in real estate and, for me, with real estate being a minority sector I will be overweight in the sector.
I strive to maintain at lease a five percent weighting in the minority sectors of materials, real estate, communication services, and utilities. Currently, I am overweight in each of these sectors based upon my target weightings.
ORK! Damn pay-wall. Anyhow, I'm overweight in Real Estate without even trying, these days: 12.54% of portfolio, though TRGRX is just 5.96% of my top 10 holdings, and my only earmarked RE fund. It's been shared here that it's best to stay domestic, though, and TRREX is doing better. One-year results: TRREX +20.21% TRGRX +14.69%.
Our own @JohnChisum advised me to own some Real Estate quite a while ago, and it's paid off. Thank you!
Agree with JohnC on the percentage. Probably have around 3-4% in one REIT (OREAX) - plenty for me. My real assets fund (PRAFX) also gets yanked around on a daily basis by its REIT exposure and may represent a safer way to get some REIT exposure.
Watching my REIT fund on a daily basis, it's my sense that it's close to topping-out near term. Not expecting much from it for a while. Might decline. Hope I'm wrong, since the exposure is part of my Core portfilio for which I use mainly a "hands-off" approach.
REITS have had a nice one-year run-up from a trough hit last autumn. I suspect the rally in bonds has helped, as real estate is highly interest rate sensitive. Keep in mind when looking at such numbers that you can't buy past performance.
REITS have had a nice one-year run-up from a trough hit last autumn. I suspect the rally in bonds has helped, as real estate is highly interest rate sensitive.
@hank, you are right on with the interest rate correlation. Now that Fed is more likely to raise rate this year, REIT is declining from its height reached several weeks ago. As long as the rate increase is slow and small, less than twice a year and 25 basis point as a time, REIT should still be okay.
Now that REITs will be part of the financial sector of S&P 500, I will trim some REIT funds so that the total REIT exposure is less than 5%.
Your guidance is much appreciated. Thanks to all. I always trim and rebalance just after the New Year. In Jan. of 2017, shall I take a chunk from TRGRX and dump it into PRDSX (Quant small-cap?) Or put it into PRIDX (int'l smid-cap?)..... Other choices include PREMX (14.68% of portfolio,) PRWCX (35.57% of portf,) and PRSNX (10.88% of portf.) **************************************** These are actual, accurate performance numbers from TRP, not from M* or Lipper or Google: (And there have been no additions nor withdrawals from any of them, so the numbers are "true." SINCE INCEPTION, meaning since I opened the positions in each:) -PRDSX +4.86% (since 8/20/2015) -PRIDX +5.09% (since Jan. 4, 2016.) -TRGRX +8.4% (also since 8/20/15.)
@Crash Appears your TRGRX numbers are closer to YTD (8.84%) and not 1 year as indicated from purchase date, which is closer to 14.5%. You're probably happier than you thought, eh?
.....Hmmmmm. I see. But THAT is perplexing. Nothing, nowhere, can be trusted, then, to be frikkin' reliable--- not even the damned account-specific performance numbers from the fund company, itself. Thanks for your note, Catch. M* does show 1-year returns as +14.69%. But when I look at the hard-dollar numbers and work it out using a separate percentage calculator, I see that TRP is on target, while M* is full of shite. (sic.)
@Crash TRPrice indicates two distributions,too; in Sept and Dec. of 2015 since your purchase. We do our numbers every week and have for many years. We do the most simple process. So, for your TRGRX; if you purchased $10,000 on your noted date and the dollar value is now $11,469 (example only), one arrives at about +14.69 return noted. I don't pay attention (other than checking) what distributions have taken place, (say over a 1 year period); but what is the total return during a given period. I did see that TRP had return numbers, but were set for one year from July 31-July 31.
Anyhoo......have to get outside again before the rain arrives.
Comments
I'm not sure I understand how this would happen. Shouldn't any passive index fund linked to the S&P 500 already have all those stocks? It seems like the massive amounts of money in passive investments shouldn't change much and that any new demand might be more likely to come from active funds or individual investors who start paying more specific attention to real estate.
I am thinking much like you on this that it will be a net to net movement as real estate securities get moved from the financial sector to the new real estate sector. Perhaps, some new money might flow into the real estate sector as some investors might wish to overweight real estate in view of its late performance. Currently, by my math, once this change takes place I will have an estimated position of seven to eight percent in real estate and, for me, with real estate being a minority sector I will be overweight in the sector.
I strive to maintain at lease a five percent weighting in the minority sectors of materials, real estate, communication services, and utilities. Currently, I am overweight in each of these sectors based upon my target weightings.
TRREX +20.21%
TRGRX +14.69%.
Our own @JohnChisum advised me to own some Real Estate quite a while ago, and it's paid off. Thank you!
Watching my REIT fund on a daily basis, it's my sense that it's close to topping-out near term. Not expecting much from it for a while. Might decline. Hope I'm wrong, since the exposure is part of my Core portfilio for which I use mainly a "hands-off" approach.
REITS have had a nice one-year run-up from a trough hit last autumn. I suspect the rally in bonds has helped, as real estate is highly interest rate sensitive. Keep in mind when looking at such numbers that you can't buy past performance.
Now that REITs will be part of the financial sector of S&P 500, I will trim some REIT funds so that the total REIT exposure is less than 5%.
****************************************
These are actual, accurate performance numbers from TRP, not from M* or Lipper or Google: (And there have been no additions nor withdrawals from any of them, so the numbers are "true." SINCE INCEPTION, meaning since I opened the positions in each:)
-PRDSX +4.86% (since 8/20/2015)
-PRIDX +5.09% (since Jan. 4, 2016.)
-TRGRX +8.4% (also since 8/20/15.)
Appears your TRGRX numbers are closer to YTD (8.84%) and not 1 year as indicated from purchase date, which is closer to 14.5%.
You're probably happier than you thought, eh?
We do our numbers every week and have for many years. We do the most simple process. So, for your TRGRX; if you purchased $10,000 on your noted date and the dollar value is now $11,469 (example only), one arrives at about +14.69 return noted.
I don't pay attention (other than checking) what distributions have taken place, (say over a 1 year period); but what is the total return during a given period.
I did see that TRP had return numbers, but were set for one year from July 31-July 31.
Anyhoo......have to get outside again before the rain arrives.