Canadian REITs – The Vanguard REIT ETF brings cost relief

In Canada, our REIT ETF choices have been limited.

The iShares REIT product is ‘the gorilla’ in this arena with Assets under management (AUM) of approximately 1.4 billion dollars. The younger BMO REIT ETF has been steadily growing, but only has about a quarter of the assets that the iShares product has.

These two companies had better look in the rear-view mirror, because Vanguard Canada now has a REIT ETF that is very enticing.

Why? The cost. This ETF has a Management Expense Ratios (MER) of only 0.35 %

Canadian REIT ETF Symbol MER Yield
Vanguard FTSE Canadian Capped REIT Index ETF VRE 0.35% t.b.a.
BMO Equal Weight REITs Index ETF ZRE 0.55% 5.41%
iShares S&P/TSX Capped REIT Index Fund XRE 0.60% 4.58%

In the past, some investors have scoffed at the price (0.60%) of the REIT ETFs and have ventured alone, selecting two or three individual company REITS to add to their portfolio. However, most investors would be better served by purchasing a REIT ETF, to provide better diversification of REIT companies.


The Cost advantage cannot be ignored.
The Vanguard REIT ETF started trading in Nov 2012. This ETF will gain a larger slice of the Canadian REIT ETF market, as investors discover the cost advantages of this product.

Individual REIT companies

For those investors interested in digging further, check out this link for a complete list of all the Canadian REITs on the TMX stock exchange.

The table below shows the percentage breakdown of each individual REIT that is held within each ETF. It is interesting to see how each ETF methodology weighs the individual REITs.

  Vanguard BMO iShares  
Company Ticker VRE* ZRE XRE Yield
RioCan Real Estate Investment REI.UN 16.3% 5.5% 20.7% 5.12%
H&R Real Estate Invest. Trust HR.UN 9.4% 5.3% 11.6% 5.38%
Dundee REIT D.UN 7.2% 5.3% 9.2% 6.08%
Calloway REIT CWT.UN 6.2% 5.5% 7.3% 5.48%
Boardwalk REIT BEI.UN 6.2% 5.8% 6.5% 2.98%
Brookfield Canada Office Prop. BOX.UN 12.7% 6.0%   3.94%
Cominar REIT CUF.UN 5.6% 5.0% 6.6% 6.56%
Canadian REIT Income Fund RIU.UN 5.9% 5.6%   4.98%
Cdn Apartment Prop REIT CAR.UN 5.1% 5.5% 5.9% 4.68%
Primaris Retail REIT PMZ.UN 5.2% 5.4% 5.4% 5.32%
Cdn. Real Estate Investment REF.UN     7.3% 3.58%
Allied Properties REIT AP.UN 4.0% 5.9% 4.9% 4.22%
Chartwell Seniors Housing REIT CSH.UN 3.7% 6.1% 4.6% 5.24%
Artis REIT AX.UN 3.4% 5.3% 4.6% 6.90%
Crombie REIT CRR.UN   5.6% 2.0% 5.99%
Northern Property REIT NPR.UN   5.1% 2.6% 4.98%
Morguard North American REIT MRG.UN   6.0%   5.45%
Dundee International REIT DI.UN   5.7%   7.48%
InnVest REIT INN.UN 0.8% 5.1%   9.24%
Morguard Real Estate Inv Trust MRT.UN 1.7%     5.31%
First Capital Realty Inc.   3.1%      
FirstService Corp.   1.6%      
Extendicare Inc. (US)   1.3%      
Melcor Developments Ltd.   0.4%      

[Update Dec 06, 2012: There was a buyout offer for Primaris.]

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