By Wehmeyer Ferreira
Property owners know the stresses and strains of buying a home. Hunting for a house, securing funding and navigating the legalities of transfer take time and energy. However, investing in an exchange traded fund (ETF) avoids these challenges, with many more benefits to boot.
One product, many properties
You can harness all of the benefits of an ETF to invest in property at low cost and without the complexity of actually buying physical property. This route also avoids putting all of your eggs in one basket. Unlike owning a house or apartment, an ETF means you’re invested in multiple property companies in different regions and in a variety of sub-sectors.
Our 1nvest Global REIT Index Feeder ETF, for example, tracks the FTSE EPRA/NAREIT Global REIT Index, which holds property equities from around the world. The vibrant US market is heavily weighted, while Europe, Asia and Australia all feature.Â
This translates into exposure to multiple property sub-sectors. While owning a house means your investment is purely in residential property, this product gives you access to everything from industrial property to self-storage to lodging/resorts.
This ETF also invests in prominent themes in the property space, such as data centres and healthcare. These represent global trends that have limited investment opportunities in South Africa.
Going global also enables investors greater diversification at a firm level. The property sector of the JSE is highly concentrated with just three firms making up approximately half the market. The SA Listed Property Index (SAPY) is also limited in size, with just 20 firms. Contrast this with the 338 firms the 1nvest Global REIT Index Feeder ETF gives access to.
Is it right for you?
The 1nvest Global REIT Index Feeder ETF is a relatively aggressive investment holding. It is designed to benefit those who want to stay the course for the long term and are prepared to weather some volatility.
It is also locally based, meaning your money remains in rands. As such, it meets the needs of investors who don’t want to use their offshore allowances or secure foreign exchange tax clearance, but still seek access to foreign markets.
Being a REIT, or real estate investment trust, this fund also provides two avenues for returns. As with any ETF, there is scope for capital return in the form of a growing price of the asset. REITs also pay dividends at regular intervals. This makes it an option for those seeking income from their investments.
As with all 1nvest ETFs and unit trusts, the 1nvest Global REIT Index Feeder ETF suits investors who seek simple, low-cost, transparent products. You can buy this product with the click of a button, monitor the price online and pay an annual fee of just 0.205%.
See if the 1nvest Global REIT Index Feeder ETF is right for you: click here to view.
1nvest Fund Managers (Pty) Ltd is an authorised Financial Services Provider in terms of the FAIS Act. Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up. Past performance, forecasts and commentary is not necessarily a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request the Manager. STANLIB Collective Investments (RF) (Pty) Ltd is a registered Manager in terms of CISCA.Â
