PFFA - VNQ: To REIT Or Not To REIT
2024-01-29 00:30:03 ET
Summary
- The total return of the Vanguard Real Estate Index Fund ETF is half of the S&P 500.
- Dividend Yield of 3% is not attractive in a higher rate world.
- P/FFO at 16x vs. FFO growth of 5% is not appealing.
- I question the relative "safety" of REITs and a valuation rethink may be warranted.
Summary
Real Estate can be a great business, REITs make it simpler and more diversified and an ETF of REITS even more diversified. However, are REIT ETFs superior long-term investments? The last 20 years of performance data suggest they are not. I took an in-depth look at Vanguard Real Estate Index Fund ETF ( VNQ ) and came away disappointed....
VNQ: To REIT Or Not To REIT