VNQI - VNQI: This International REIT ETF Provides Good Diversification For A Portfolio
2025-07-07 14:12:07 ET
Recently, I've been looking for a good way to invest in international REITS. There are many reasons why a US investor might want to do this in a core portfolio:
Better diversification and reduced concentration risk: My portfolios already hold a lot of US real estate exposure in closed-end funds and preferred stocks. These investments are exposed to economic downturns and regulatory changes in the US. International REITS offer a way to spread real estate investments across different economies.
Access to Emerging Markets: Rapidly growing economies in countries like Singapore and India can offer high growth potential.
Different Economic Cycles: When the US market is slowing down, other areas of the world may be experiencing growth. This can smooth out the overall portfolio return.
Property Type and Sector Diversification: Some property types may react differently in international markets than in the US.
Currency Diversification: International REITS can be a good hedge against a weak US dollar.
Access to Unique Opportunities: Different regions of the world may have strong natural resource sectors which impact industrial real estate. Some regions like Japan may be strong in technology innovation which leads to increased demand for data centers.
Transparency and Liquidity: Some of the same advantages of US REITS also apply to international REITS. Many are publicly traded on major exchanges and offer decent liquidity which is not available if you own real estate directly.