Real Estate ETFs

Average returns in this Category	3 months return	6 months return	12 months return	YTD return

Real Estate	22.03%	73.30%	-23.93%	24.88%

Ticker SPY	Name	3 months return	6 months return	12 months return	YTD return

TAO	Claymore/AlphaShares China Real Estate ETF	11.47%	85.18%	29.37%	68.69%

FFR	First Trust FTSE EPRA/NAREIT Global Real Estate Index Fund	17.93%	78.61%	-22.41%	25.2%

PRY	FTSE RAFI International Real Estate Portfolio ETF	0%	41.23%	-32.07%	9.55%

ICF	iShares Cohen & Steers Realty Majors Index Fund	25.75%	55.01%	-42.38%	5.68%

IYR	iShares Dow Jones U.S. Real Estate Index Fund	24.93%	67.64%	-36.37%	11.17%

IFGL	iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund	0%	0%	-36.37%	0%

WPS	iShares S&P World Property ex-US ETF	22.77%	83.76%	-10.32%	35.67%

RWO	SPDR DJ Wilshire Global Real Estate ETF	26.1%	71.66%	-28.41%	20.99%

RWX	SPDR Dow Jones Wilshire International Real Estate ETF	24.93%	72.31%	-17.63%	33.05%

URE	Ultra Real Estate ETF	52.59%	134.31%	-81.55%	-12.5%

SRS	UltraShort Real Estate ETF	-45.32%	-82.67%		-78.7%

DRW	WisdomTree Intl. Real Estate Fund	25.5%	84.14%	-14.23%	37.71%


	About Real Estate ETFs
Real Estate ETFs: Overview and forecast The housing industry, and the real estate sector, was the original indicator of the big economic crash looming for the US and the world. History of a very expensive kind was made as first the US housing sector and then the credit markets went into free fall. Massive numbers of foreclosures The Real Estate ETFs didn't do well out of that long, bitter, crash. Returns to date for the last 12 months are down from 40% to up to 81%. The US housing sector turned into a disaster area, and the construction industry caved in as demand collapsed. The crash in prices and credit crunch simultaneously undermined the retail and commercial property sectors. The ramifications of this crash will be occupying professional economists for decades, if not centuries. The problem for investors in Real Estate ETFs is that real value is hard to fathom. The American Real Estate ETFs, understandably, have been diversifying out of the US market, trying to avoid the margin issues in US property stocks. Even reading the holdings for the Real Estate ETFs can be a bit difficult, let alone analyzing them. To complicate matters, some of the Real Estate ETFs are technically listed as investing in Financial Services, like property trusts. Therein lies another tale, the story of the various property trust holdings and their rather monumental, not to say epic, writedowns. So valuations are tough even at the baseline, let alone up the food chain at major investment level. Real Estate ETFs performances are all over the place. Some Real Estate ETFs are finally showing some mild positive results, others are pretty grim. The real estate sector, on all levels remains weak, and ETF prices reflect that fact. The usual market wisdom is to go looking for undervalued stocks, and in fairness, many property holdings in the commercial sector in particular would be much stronger in any normal economic times. It's not a matter of if, but when, value returns to the sector. Short term (6 months) That's not going to make things any easier for analysts to pick Real Estate ETFs with any confidence. The market works on return values, and it would be charity, not profit, to invest blindly. There are other investment opportunities created in other sectors, and the rationales for investment need more than sentiment. The fact is that the Real Estate ETFs will move when investment capital and the private investment market believe in the ROIs (return on investments). The construction sector can be expected to be soft across the areas covered by unoccupied housing, but may pick up in the commercial developments and redevelopment scenarios flagged by the new Obama administration. Medium Term (2 years) The medium term is a lot more positive than the current black hole scenario for the Real Estate ETFs. Asset mixes in these ETFs contain stronger market performers, like the surviving big shopping mall owners, and some foreign holdings will definitely pick up before the US main drag of property stocks. The key will be investment and some sensitivity in dealing with market expectations regarding performance. The iron rule in the investment sector is "Perform or die". Weak investment strategies won't be tolerated. It will be noted that some of the Real Estate ETFs which have really been blasted by the market have holdings which do tell a tale. They're not strong investments. The markets have walked. In the medium term, investors will want to see real performance. Long term (5 years) It would be surprising if the Real Estate ETFs don't rationalize and evolve in the long term into good institutional investments for big capital. The investment culture is changing, and it's unlikely that the property sector will remain flat over the long term. Real estate is a very high performer in the investment markets, and this massive crash is quite atypical. The real estate sector has a few strengths which will do a lot to help return the US and global economy to normal. Domestic demand and improved credit economics will eventually eat up the excess stock in the housing market, and drive prices into positive returns. Real Estate ETFs will become far more advanced and much more effective investment vehicles in this healthier environment. Qualifier to projections There's one unequivocal fact about the real estate sector. The sector can generate huge returns, unlike any other. It produces massive capital for investors. It is, in many ways, the epitome of market capitalism. It is a driver of the domestic economy of all nations. It can also be its own worst enemy. It can be vulnerable to its own market forces. Valuations of assets are the common cause of the problems. There are right ways to value property assets, and wrong ways. The right way is the formal valuation process, which is unromantic, is usually pretty accurate. The wrong way is basically producing works of fiction and expecting people to invest on that basis. Valuations killed the biggest property market in US history, decimated the housing and credit markets, and produced some of the worst corporate decisions in history. The new investment culture, however, is unlikely to be as apathetic as the old culture. In the past, valuations and property portfolios didn't get the sort of scrutiny they needed. Over valuations became massive weaknesses, and the basis of some truly terrible investment situations. The new property sector will be leaner, much tougher, and in all probability regulated differently. One absolute certainty: At least some of the Real Estate ETFs now on the market won't be around in the future. The market is making it clear what it wants, and some of the obviously ineffective Real Estate ETFs aren't looking at all good. Investors are strongly advised to be ultra critical, and to research each of the Real Estate ETFs in detail, checking out holdings and asset mixes. The real estate market is one market where investors can be critical to their hearts' content. The Net Asset Value of a good Real Estate ETF should be conservatively valued, supported by actual sales values. Market valuations should make sense, not be based on the mythology of a theoretical upside. This is The Revenge Of The Investors, in some ways, but being demanding will get results.

Last Updated on: 2010-01-14 02:03:40

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